The Commodity Futures Trading Commission (CFTC) issued a Notice of Proposed Rulemaking (NPRM) on June 10, 2026, proposing amendments to 17 C.F.R. section 40.11 and the addition of Appendix F to Part 40 of the CFTC's regulations. The NPRM follows the Advanced Notice of Proposed Rulemaking issued on March 12, 2026, in which the CFTC sought public comment on the need for new rules governing prediction markets operating through Designated Contract Markets. The proposals are at the proposed rulemaking stage and open for public comment.
Section 5c(c)(5)(C) of the Commodity Exchange Act (CEA) prohibits event contracts involving activities including gaming, terrorism, assassination, war, and conduct unlawful under federal or state law, unless the CFTC determines a specific contract is not contrary to the public interest. Proposed amendments to Regulation 40.11 would establish a contract-by-contract review procedure requiring Designated Contract Markets (DCMs) to submit new event contracts to the CFTC for evaluation before listing. The proposed 90-day review process includes procedural protections for contract submitters and a public comment mechanism on individual submissions. Proposed Appendix F to Part 40 sets out the public interest factors the CFTC will apply when evaluating whether a submitted event contract involving an enumerated activity should be permitted.
Prediction market platform operators, including those offering contracts on political events, sporting outcomes, economic data releases, and other real-world occurrences, must assess each contract type against the CEA Section 5c(c)(5)(C) enumerated activities before listing. DCMs must submit new event contracts that potentially involve enumerated activities to the CFTC under the proposed review procedure and await agency determination before listing. Non-DCM platforms currently offering prediction market contracts without CFTC registration face increased regulatory scrutiny and must either register as a DCM or restructure contracts to fall outside the statutory prohibition.
The NPRM does not resolve the pending legal questions about whether specific contract types, including contracts on federal election outcomes, fall within the CEA's statutory prohibition on enumerated activities. The public comment record from the March 2026 ANPRM phase was extensive on these questions, and the public interest factors in proposed Appendix F will be a primary focus of responses to the NPRM. The comment deadline will be specified in the Federal Register notice upon publication.
Licentium advises prediction market platforms and event contract operators on CFTC regulatory compliance and DCM registration strategy. We maintain a partner network covering U.S. derivatives and gaming regulatory matters. Contact us to discuss how the NPRM affects your platform or product line. Work we undertake includes event contract classification analysis, CEA Section 5c(c)(5)(C) enumerated activity assessment, DCM registration support, and regulatory comment preparation for the NPRM process.