By Nick Devor
The Commodity Futures Trading Commission on Wednesday proposed new prediction market rules on that would permit federally-regulated event contracts tied to the outcome of sporting events and individual player performance.
Contracts that likely won't be permitted under the proposed rules include those related to player injuries or fights, officiating decisions, and contracts tied to discrete player actions, such as the next pitch thrown in a baseball game. "Pre-collegiate sports events" are also likely to be deemed against the public interest. As with the current rules, contracts tied to war, terrorism, and assassination are barred.
"This proposal gives the Commission a durable, transparent framework to identify the contracts Congress directed us to scrutinize while letting legitimate markets move forward," said CFTC Chairman Mike Selig in a press release.
The proposed rules lifted shares of sports betting firms DraftKings and Flutter Entertainment, the parent company of FanDuel, whose stocks have enjoyed a boost of prediction-market news this week after being crushed over the past year.
Barron's reported in a recent cover story that the easy growth is over for traditional sports betting in the U.S. Handle, or total dollars wagered, recently declined year-over-year for the first time in more than five years. State legislators are raising taxes on sportsbooks, while public health concerns and worries about sports integrity are contributing to a growing betting fatigue.
Enter: prediction markets. The platforms effectively provide sports betting through event contracts tied to the outcomes of sporting events, but are legal nationwide and available to anyone over the age of 18. The narrative that prediction markets would disrupt sportsbooks has worked against DraftKings and Flutter, but the firms have developed their own prediction market platforms and are starting to put their marketing and product development experience to work in populous states they are otherwise banned from.
DraftKings announced on Tuesday that annualized consumer trading volume on its prediction market rose 24% month over month to $1.3 billion in an SEC filing. The numbers are preliminary -- and far lower than even a week of sports trading volume on the prediction market Kalshi -- but sent DraftKings stock soaring as much as 11% in intraday trading.
"The market is beginning to digest that DraftKings and Flutter could benefit from prediction markets," says Chris Grove, partner emeritus at gambling industry research firm Eilers & Krejcik Gaming. "Anything that provides a reasonable path to total addressable market expansion for DraftKings and Flutter in the U.S. is likely to serve as a net tailwind for the stock."
Still, there is a long road ahead for sports prediction markets. These proposed rules will be subject to a 45-day public comment period. CFTC staff will have to wade through that feedback before writing their final draft of the rules, which the CFTC will then certify.
And all of that is before any of the dozens of lawsuits over sports betting and event contracts makes its way to the Supreme Court.
"Chairman Selig's announcement suggests progress toward a greater level of regulatory certainty regarding prediction markets," Grove says. "But it's important to note that this isn't the final word from the CFTC on the prediction market matter, and the CFTC may well not even have the final word when all is said and done."
Write to Nick Devor at nicholas.devor@barrons.com
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(END) Dow Jones Newswires
June 10, 2026 14:03 ET (18:03 GMT)
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