CFTC Proposes Ban on Political Betting Contracts, Citing Public Interest Concerns

The U.S. Commodity Futures Trading Commission (CFTC) has proposed a ban on event contracts that allow betting on political outcomes, citing concerns about their compatibility with public interest and drawing parallels to contracts related to war, terrorism, and assassinations. The proposed rule, approved by the three Democratic appointees on the commission, would forbid the listing and clearing of such contracts, which have gained popularity in recent years via platforms like PredictIt, Polymarket, Zeitgeist, and Kalshi. These platforms let users place yes-or-no bets on the outcomes of real events, including elections and policy developments. The proposal follows a years-long legal battle between the CFTC and such firms, and would ban contracts on political outcomes, awards contests, and sports events for U.S.-regulated companies. Chairman Rostin Behnam argued that such contracts “commodify and degrade the integrity of the uniquely American experience of participating in the democratic electoral process.” The proposal must pass through a 60-day comment period before being approved as a final rule. Critics of the proposal, including Commissioner Caroline Pham, called it an “overreach” and called for a review of the CFTC by the Government Accountability Office. In contrast, former CFTC commissioner and advisor to prediction market company KalshiEx, Brian Quintenz, called the ban a “stunning overreach” and argued that it creates uncertainty and pushes people towards unregulated offshore venues, potentially exposing them to harm.