A federal agency has proposed a new rule that could loosen its regulation of prediction markets — and undercut tribal and state governments’ challenges to those markets’ operations.
The proposed rule, published June 12 in the Federal Register, would revise how the Commodity Futures Trading Commission (CFTC) evaluates event contracts. These contracts, traded on prediction markets, pay contract holders based on the outcome of a given event, such as election, a sports game, or the weather on a particular day.
The CFTC’s proposed revisions would narrow the agency’s own authority to disallow particular contracts. The Commodity Exchange Act gives the CFTC special authority to block contracts involving gaming, war, terrorism, or unlawful activity, but the proposal would narrow how that authority applies.
Under the new rules, the commission — currently led by Chairman Michael…
