Less props for prediction markets under proposal

Prediction markets such as Kalshi and Polymarket could soon be barred from offering certain types of sports-related event contracts, including those involving officiating outcomes or player injuries. The Commodity Futures Trading Commission, the federal agency that regulates prediction markets, on Wednesday released a 267-page proposal that would rework and more carefully define some of the rules governing prediction markets and the types of event contracts they can offer. The proposed framework would leave the door open for most but not all sports-related trades, which have become a massive profit driver for prediction markets. Though the CFTC states that each event contract would be reviewed individually, it outlines several sports-related examples that are likely "to be found to be contrary to the public interest" and therefore prohibited. These include event contracts on the occurrence or severity of injuries, refereeing decisions, physical altercations during games, and youth sporting events. The proposed rules would also likely bar "discrete-action contracts involving specific participants," more commonly known as in-game props. "The Commission believes that event contracts are more likely to be contrary to the public interest when any meaningful information about whether the underlying event will occur is unavailable to the broader market," the proposal states. "This includes events that are entirely random or where insight into the underlying event is highly concentrated -- in a single individual, for example, or only individuals legally prohibited from transacting." The NBA has asked the CFTC to prohibit trades on events that could be prone to manipulation, such as those relating to officiating, injuries and fan actions. The NFL has similarly asked prediction market operators to stop offering such trades. The new rules would also outlaw several types of event contracts that are unrelated to sports, including those involving war, assassinations or acts of terrorism. Trades on military action have been a source of public outcry and scandal. In April, authorities indicted a soldier who made $400,000 on Polymarket by allegedly trading on classified information about the timing of Venezuelan President Nicolás Maduro's capture. He has pleaded not guilty. The CFTC said it will welcome public comments on the proposed rules for 45 days before implementing any changes. Spokespeople for Kalshi and Polymarket did not immediately reply to messages from ESPN seeking comment on the proposed rules. Wednesday's proposal comes amid a period of tremendous growth -- and scrutiny -- for prediction markets. According to data published by the Pew Research Center last month, the combined monthly trading volume on Kalshi and Polymarket more than quadrupled in a span of eight months, from less than $5 billion in September 2025 to $24 billion in April 2026. Pew found that Kalshi in particular has seen a boon from sports-related trades, which have made up 80% of its total trading volume since July 2024. (About 39% of Polymarket's trading volume during the same time involved sports, according to Pew.) Critics, meanwhile, have argued that prediction markets are no different from gambling, particularly when it comes to sports. Several states -- including Arizona, Minnesota and New York -- are engaged in legal fights with the CFTC over where and how prediction markets should be regulated, and other states have sued specific prediction markets for violating state gaming laws. Sens. John Curtis, R-Utah, and Adam Schiff, D-Calif., introduced a bill in March that would ban any event contracts that resemble sports bets. While the CFTC's proposed framework curtails some sports-related trades, it also offers a detailed defense of sporting event contracts involving the outcome of a game or the general performance of a team. The CFTC describes sports teams as "economic enterprises" and stadiums as "regional economic anchors," arguing that most sports-related contracts have public utility. "Anyone interested in that team as an economic enterprise can use information derived from those event contracts as one factor in economic decision-making on a variety of topics," the CFTC's document states. "Just as the corn futures market is about more than just corn, a prediction market about one sporting event is about more than just that sporting event." The CFTC, which usually consists of five commissioners, now has only one: Chairman Michael Selig, who was appointed by President Donald Trump in December. Selig said in a statement that the new rules would provide "a durable, transparent framework to identify the contracts Congress directed us to scrutinize while letting legitimate markets move forward." ESPN's Shwetha Surendran contributed to this report.