The U.S. Commodity Futures Trading Commission made a sharp policy turn on Thursday, issuing its first staff guidance for prediction market platforms and launching a formal rulemaking process — a reversal from the agency's years of legal opposition to the industry.

What Changed

The CFTC under Chair Michael Selig published Letter No. 26-08, a non-binding staff advisory directed at designated contract markets (DCMs) including Kalshi, Coinbase, and Polymarket. The guidance outlines how platforms should get new trading products listed and requires that contracts not be "readily susceptible to manipulation." Platforms listing sports-related contracts must also engage with relevant sports governing bodies.

Simultaneously, the agency issued an Advanced Notice of Proposed Rulemaking, opening a public comment period on permanent regulations for event contracts. The full rulemaking path — public comments, proposed rule, then a final rule — is expected to take months.

From Adversary to Regulator

Under the Biden-era CFTC, the agency fought Kalshi in federal court over election betting contracts. Selig dropped that appeal after taking office and has since positioned the CFTC as the sole federal regulator for prediction markets, directly contesting state gaming authorities who claim jurisdiction over sports-related event contracts.

"This begins the process of new rulemaking grounded in a rational and coherent interpretation of the Commodity Exchange Act," Selig said, framing prediction markets as "a proven source of reliable information for news media, sports leagues, financial institutions, and everyday Americans."

What Comes Next

Several U.S. states have sued prediction market platforms over sports betting. Selig has filed court briefs asserting exclusive federal jurisdiction. The regulatory clarity — even before a final rule — signals a more stable operating environment for platforms that have long existed in legal limbo.