CFTC Withdraws Proposed Event Contracts Rule, Signals New Regulatory Path
The CFTC has withdrawn its proposed event contracts rule and related advisory, pivoting toward a more measured, innovation-friendly regulatory approach.
The Commodity Futures Trading Commission has formally withdrawn its 2024 proposed rulemaking on “Event Contracts” and a subsequent staff advisory related to sports event contracts, marking a shift in federal regulatory strategy toward event-driven markets such as prediction products.
In Press Release 9179-26 issued February 4, 2026, the Commission announced that it “does not intend to issue final rules” based on the prior proposal and advisory, and instead plans to pursue new rulemaking grounded more clearly in the **Commodity Exchange Act” (CEA) to “promote responsible innovation” in derivatives markets.
What Was Withdrawn?
The press release withdraws two items:
- Event Contracts Rule Notice of Proposed Rulemaking — originally published in June 2024, it sought to define and regulate “event contracts,” including those tied to political outcomes or other public events.
- Staff Advisory on Sports Event Contracts — issued in September 2025, this letter had aimed to clarify regulatory expectations but was criticized for creating uncertainty among market participants.
By removing both, the CFTC is effectively erasing its prior regulatory path and starting anew, an approach Chairman Michael S. Selig says will better align with statutory authority and market realities.
This comes shortly after Selig made clear that the CFTC would support the regulation and adoption of prediction markets.
Commission Chairman Frames Shift as Innovation-Friendly
In the announcement, Chairman Selig said the previous event contracts proposal was tied to “merit regulation” and reflected an approach he deemed overly broad and unsuited to the current market environment.
He said the proposed rule, which was viewed by some as aiming to ban certain types of event contract, “reflected the prior administration’s frolic into merit regulation with an outright prohibition on political contracts.” Selig added that the Commission will instead work on a “rational and coherent interpretation” of the CEA that supports innovation while protecting market integrity.
Why This Matters for Prediction Markets
The withdrawal is significant for platforms offering event-based contracts, such as election outcomes, weather, entertainment, or sports results, because the original proposed rule was seen by many operators as a potential ban on a broad class of products that had been gaining traction, particularly in crypto and fintech circles.
Under the earlier proposal, regulators appeared poised to treat certain event contracts as unsuitable for the derivatives markets, generating fear among operators that they could be effectively prohibited if finalized.
That uncertainty contributed to legal and regulatory battles, particularly at the state level, where platforms have faced enforcement actions arguing these contracts amount to gambling.
By withdrawing the rule and staff advisory, the CFTC is signaling that it intends to rethink how to regulate event contracts within the existing statutory framework rather than prohibit them outright.
What Comes Next: New Rulemaking
The press release makes clear that the Commission intends to pursue new rulemaking on event contracts, likely using the Commodity Exchange Act as a foundation.
That rulemaking could provide:
- Clear definitions of what types of event contracts are permissible
- Registration requirements for platforms offering such markets
- Compliance standards tied to market integrity, fraud prevention, and customer protections
Chairman Selig described this approach as promoting “responsible innovation”, a phrase suggesting that event contracts may be regulated more like traditional futures and options if properly tailored to statute.
Industry and Regulatory Context
The U.S. derivatives markets are undergoing a period of reevaluation as digital assets, prediction markets, and crypto-related products expand the scope of what can be traded legally.
Earlier in 2026, federal regulators, including the Securities and Exchange Commission, discussed harmonizing oversight of emerging markets, including through initiatives such as Project Crypto.
Meanwhile, state regulators have taken varied approaches, with some pursuing enforcement actions against prediction market offerings they classify as gambling.
Federal withdrawal of the 2024 proposal removes one layer of uncertainty for industry participants, but the absence of a final rule means that the regulatory environment remains in flux.
What Stakeholders Are Watching
Market observers and operators will now watch for:
- Advance notices of proposed rulemaking on event contracts
- Public comment periods that could shape the final regulatory framework
- Clarifications on how existing CFTC authority applies to new financial products
- Coordination between federal regulators and state authorities on overlapping jurisdiction
The shift also coincides with broader U.S. policy discussions about how to regulate derivatives and digital markets in a way that balances innovation, competition, and investor protection.
Bottom Line
By withdrawing both the 2024 event contracts proposal and its 2025 advisory, the CFTC has effectively reset federal regulatory intentions for a class of contracts that sits at the intersection of traditional derivatives, fintech innovation, and state-level gambling debates.
The decision removes a potential ban that troubled many market participants, and signals a pivot toward a more tailored, statutory approach that could ultimately define how event contracts, including those tied to sports, politics, and other outcomes, are regulated in the U.S.
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