The U.S. Commodity Futures Trading Commission (CFTC) proposed new rules on Wednesday to regulate the growing prediction market sector, targeting controversial markets on platforms like Polymarket and Kalshi. The rules would ban wagers on outcomes involving war or assassination, such as foreign leaders being ousted via violent means. Specifically, markets on the removal of figures like Iran's Supreme Leader or Venezuela's president would be prohibited unless they specify non-violent outcomes like electoral defeat or resignation. The CFTC also aims to limit sports-related bets prone to manipulation, including those on player injuries, referee calls, or specific plays, though it considers aggregate sports outcomes permissible. The 267-page proposal enters a 45-day public comment period. Polymarket expressed support for clarity, while Kalshi didn't comment. The rules face opposition from states arguing they enable unregulated gambling, with the issue likely headed to the Supreme Court.

Key facts

• CFTC proposes banning prediction markets on war, assassination, or violent ouster of leaders.
• Markets on foreign leaders' removal allowed only if non-violent outcomes specified.
• Sports prop bets on injuries, referee calls, and specific plays would be limited.
• Polymarket supports the initiative; Kalshi did not comment.
• Proposal enters a 45-day public comment period; legal challenges expected.
• Aggregate sports outcomes considered permissible by CFTC.
• States oppose the rules, arguing they enable unregulated gambling.