The CFTC Is Tying Its Own Hands on Prediction Markets

This piece explains how a recent CFTC proposed rule would effectively hand prediction-market platforms a long-term shield from meaningful oversight by turning agency inaction into de facto approval. After industry-favored leadership moves in 2025-26 and litigation over state attempts to treat platforms like gambling, the CFTC’s proposal would require the agency to begin public-interest reviews within 10 days, issue detailed written bases within tight windows, and conclude a 90-day statutory review or be deemed to have taken “final agency action.” Non-action would count as a “determination,” and any future decision to delist a contract would have to reconcile itself with hundreds of thousands of earlier contracts that remained listed due to inaction. Firms such as Kalshi and Polymarket are central to the dispute.

The proposal is attacked as procedurally and legally flawed: Congress set a 90-day review limit but never required when the review must start, so imposing a start deadline contradicts statutory design and administrative-law norms. The rule would be arbitrary and capricious given the agency’s shrunken staff and the explosive growth of listings (one platform jumped from ~1,600 to 162,000 daily contracts), which invites gaming by batch listings and makes meaningful review infeasible. Finalizing the rule would lock in current policy choices, impede future administrations’ ability to protect the public, and almost certainly prompt litigation challenging its validity.