The Commodity Futures Trading Commission (CFTC) is acknowledging that it will seek formal restrictions on violence-based prediction markets. A recent Notice of Proposed Rulemaking (NPRM) published by the federal agency will amend Rule 40.11 to clarify the commission’s ability to restrict event contracts linked to terrorism, war, assassination, and gaming.
In an interview earlier this week on Fox Business, CFTC Chairman Mike Selig reconfirmed the intent of the June 2026 NPRM, which seeks to implement a “durable, transparent framework to identify the contracts Congress directed us to scrutinize while letting legitimate markets move forward.” Chairman Selig, a former defense attorney, told Maria Bartiromo this week that “the core rule relates to 40.11, the ability of the agency to restrict trading on products involving war, terrorism… assassination, and gaming. Those rules will all be finalized in the coming months.”
The NPRM is likely to impact exchanges that plan on becoming CFTC-regulated platforms at some point in the future. Currently, Polymarket technically operates an international exchange that is not offered to US residents, although it is widely known that many account holders in the United States use remote access software (a VPN) to trade on that exchange.
Influencer-led prediction platforms could also be hit by the incoming rules, especially if they wish to launch a legal app that’s authorized under the CFTC’s regulatory remit. Controversial markets on whether an influencer will participate in some form of “street takeover” or “street fight” are likely to be restricted by the CFTC under the proposed Rule 40.11 amendments that will ban the trading of contracts linked to actions that are defined as illegal activities under state or federal laws.
Novig’s exclusive focus on sports-related outcomes means that it doesn’t host any trades that are related to global affairs or influencer behaviors, but this won’t necessarily shield its contracts from scrutiny. Trades that are easily manipulable (like a first pitch, specific referee calls, and injury status) could be deemed “contrary to the public interest” by the agency.
For the most part, Kalshi has eliminated controversial contracts that could be directly or indirectly linked to war, terrorism, or assassination. However, the same “gaming” restrictions can be applied to micro-level markets that are tied to sports contests.
The interpretation of “gaming” contracts was originally understood by many to relate to casino-style mechanisms that might eventually make their way into prediction market products. But that isn’t what the category covers within the “contrary to the public interest” clause that the CFTC can use to eliminate specific sports-related markets that deal with micro-level actions, including “Gatorade color” props or what a player might say during a press conference.
The amendments will also sweep in prediction markets related to esports contests such as League of Legends, Counter-Strike 2, etc. Competitive gaming events are subject to potential player manipulation, which could result in certain markets receiving a lower risk-assessment grade from the prediction exchanges that host them, even if they manage to pass the CFTC’s case-by-case evaluation.
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