CFTC Drafts 267-Page Crystal Ball: Tells Polymarket & Kalshi Which Futures Are Too Spicy to Trade

The U.S. Commodity Futures Trading Commission unveiled a new set of proposed rules Wednesday aimed at governing the fast-growing prediction market sector, laying out a framework for assessing event contracts rather than imposing sweeping category bans. The proposal, detailed in a 267-page document, would establish criteria for determining whether specific contracts serve the public interest, with direct implications for platforms including Polymarket and Kalshi, the two most prominent U.S.-based prediction markets.

Among the most notable provisions, the rules would prohibit wagers on the date a political leader might be removed from office if the path to that outcome involves war or assassination. Markets would be barred from resolving to "yes" through violent means, but could still resolve affirmatively in cases of "electoral defeat, resignation, constitutional removal, negotiated departure, or natural death." The language appears designed to close a loophole that Kalshi and Polymarket have used to offer bets on when enemies of the U.S. government might leave power, including Iran Supreme Leader Ali Khamenei and Venezuelan president Nicolas Maduro. The CFTC's proposed rules would also restrict certain sports-related markets deemed susceptible to manipulation or contrary to the public interest, including wagers on individual player injuries, referee calls, discrete player actions such as specific plays or fouls, and physical altercations between players. More broadly, the agency has taken the view that prediction markets on sports outcomes are permissible and consistent with existing law on event contracts.

Several such markets remain live on both platforms. One open Polymarket wager, which has attracted over $14 million in trading volume, asks who will lead Iran by the end of 2026; Mojtaba Khamenei, the current Supreme Leader, is at 69% odds. His father, wife, and sister were killed in joint Israeli-American strikes on Tehran earlier this year. On Kalshi, a market with $1.6 million in trading volume tracks the odds that Reza Pahlavi, the former crown prince of Iran, will take over the country by the end of the year, an outcome that would likely require the collapse of the current Iranian government. Representatives for Polymarket and Kalshi did not immediately respond to requests for comment.

The CFTC's move comes amid heightened scrutiny of the sector, including a recent probe by a U.S. House panel into alleged insider trading on prediction platforms. President Donald Trump pressed Tuesday for federal regulators to retain control over prediction markets, calling the issue "critically important" as states move to treat the sector as gambling under their own laws. "We cannot have SCUM like Chris Christie, Letitia James, Tim Walz, and JB Pritzker setting the rules," Trump wrote on Truth Social, adding that the CFTC's "exclusive authority" over the matter should be preserved.