No injuries, no props: CFTC proposes prediction market rules - ESPN

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