CFTC Proposes Restrictions on Prediction Market Contracts

The Commodity Futures Trading Commission released a draft rule Wednesday that would bar certain event contracts tied to war, terrorism, and assassination. The proposal would require exchanges to screen contracts before listing them and would give the agency authority to review or reject contracts that reference those topics.

Event contracts allow traders to take positions on whether a specific outcome will occur by a set date. Current platforms list contracts on elections, economic data releases, and other public events. The new draft would expand the list of prohibited categories and require platforms to demonstrate that listed contracts do not involve the restricted subjects.

The agency will accept public comments on the draft for 60 days before deciding whether to finalize the rule. If adopted, exchanges would have 90 days to remove or modify any contracts that fall under the new restrictions.