CFTC Proposes Ban on War, Assassination Prediction Markets

In brief

The CFTC proposed banning prediction markets on outcomes dependent on war or assassination, including the ouster of foreign leaders.

It would also bar certain sports prop bets, such as wagers on injuries, referee calls, and specific plays.

The proposal now enters a 45-day public comment period.

The CFTC unveiled a new set of proposed rules Wednesday that would govern the emerging prediction market sector—including provisions that would outlaw numerous types of controversial markets that have proliferated on popular platforms like Polymarket and Kalshi.

The new rules, for instance, would prohibit wagers on the date by which a political leader might be removed from office, when the possible path to that outcome includes war or assassination. In past months, Kalshi and Polymarket have both attempted to sidestep existing prohibitions on war-related markets by offering vaguely worded bets on when enemies of the U.S. government—including Iran Supreme Leader Ali Khamenei, and Venezuelan president Nicolas Maduro—would be “out of office.”

Those sorts of markets, which have attracted plenty of controversy and hundreds of millions of dollars in trading volume, would be barred under the CFTC’s new rules—unless they specified that the markets would only resolve to yes in non-violent cases of “electoral defeat, resignation, constitutional removal, negotiated departure, or natural death.”

Prediction markets wagering on the outcome of ongoing U.S. conflicts abroad currently feature on both Polymarket and Kalshi. One open Polymarket wager, which has attracted over $14 million worth of trades, asks who will be Iran’s leader by the end of 2026. The nation’s current Supreme Leader, Mojtaba Khamenei, currently leads with 69% odds. His father, wife, and sister were killed in joint Israeli-American strikes on Tehran earlier this year.

On Kalshi, a live market with $1.6 million in trading volume currently tracks the odds that Reza Pahlavi, the former crown prince of Iran, will take over the country by the end of the year. Pahlavi, an exiled enemy of the Iranian regime, would all but certainly only be in a position to take over the country if the nation’s current government collapsed or was driven out.

“We are fully supportive of the CFTC’s initiative to provide clarity for prediction markets and remain committed to working toward a federal framework that protects the public and supports innovation—we look forward to commenting on the Commission’s proposed rule," a Polymarket spokesperson told Decrypt.

Representatives for Kalshi did not immediately respond to Decrypt’s request for comment.

The proposed prediction market rules from the CFTC, laid out in a sprawling 267-page document, would also limit certain types of sports-related markets deemed susceptible to manipulation and contrary to the public interest. Those include wagers on individual player injuries, calls made by referees, discrete player actions like specific types of plays or fouls, and physical altercations between players.

Broadly, however, the CFTC has taken the view that prediction markets on sports outcomes are permissible and consistent with existing law on event contracts.

“The Commission preliminarily believes that the record supports the conclusion that event contracts involving aggregate outcomes can be operated consistent with the public interest,” the proposed rulemaking reads.

That position has attracted enormous pushback from red and blue states alike, which have argued in a suite of ongoing federal lawsuits that sports-related prediction markets are just unregulated betting by another name, and should be regulated at the state level. The issue is likely to ultimately be resolved by the U.S. Supreme Court.

The CFTC’s proposed prediction market rules now enter a 45-day comment period in which anyone can share their thoughts on the proposal with the agency directly.