The Commodity Futures Trading Commission issued its initial proposed rulemaking on prediction markets Wednesday. The rules aim to clarify which event contracts qualify as being in the public interest under federal law.
The proposal, released June 10, sets out a three-part test for evaluating contracts. It would require that an event occur, involve one of several restricted categories such as war or assassination, and then receive a formal commission determination. Sports-related contracts receive favorable treatment under the framework. The CFTC indicated that markets settling on final scores, point differentials or team performance would weigh against findings that they are contrary to the public interest. Chairman Mike Selig said the proposal protects market integrity without blocking responsible innovation. The agency is seeking public comments on the measure, which would take effect 60 days after finalization. The CFTC currently operates with only its chairman after the White House left four commissioner seats vacant.
