CFTC Chair Selig confirmed plans to set self-certification standards and launch formal rulemaking for prediction markets on Tuesday. We break down what it means for the industry.
CFTC Chairman Michael Selig used a Washington stage Tuesday to deliver the clearest roadmap yet for where federal prediction market regulation is headed. And he put a timetable on it.
Speaking at the Milken Institute Future of Finance event, Selig confirmed the agency will set formal self-certification standards for event contracts and move forward with an Advanced Notice of Proposed Rulemaking, or ANPRM, as the foundation for comprehensive prediction markets rules.
“We’re going to be setting very clear standards as to the types of prediction markets that can be self-certified in our markets,” Selig said. “We’re also planning to move forward with an advanced notice of proposed rulemaking in the near future that will set the stage for more fulsome prediction markets rulemaking.”
He also signaled that guidance — a faster, less formal policy tool — is coming even sooner. “We are going out with guidance in the very near future, so please stay tuned.”
Selig appeared alongside SEC Chairman Paul Atkins in a joint session, consistent with the agencies’ ongoing Project Crypto coordination. He also announced that perpetual futures guidance is expected within the next month.
What Selig actually said — and what it means
The ANPRM announcement is the most consequential part of Tuesday’s remarks at the Milken Institute panel on “Modernizing Market Regulation.” An ANPRM isn’t a rule, but rather a formal public signal that the agency is considering rulemaking, published in the Federal Register and open for public comment. Basically the CFTC is presenting a problem that needs to be solved, and asking for feedback that could shape whatever proposed rule comes next.
That proposed rule, called a Notice of Proposed Rulemaking (NPRM), is where actual regulatory text gets written and subjected to a comment period, typically 60 to 90 days. A final rule follows after the agency reviews comments and publishes its response. The full cycle, from ANPRM to final rule, can take anywhere from one year to several.
Guidance, by contrast, can come out of CFTC staff quickly and without formal comment periods. It carries less legal weight and can be reversed easily — which is partly why the February withdrawal of the Biden-era event contracts proposal and a September 2025 advisory was so administratively straightforward. Selig appears to be sequencing deliberately: guidance first to reduce near-term uncertainty, then the ANPRM and rulemaking to lock in something durable.
One thing worth understanding about the current CFTC: Selig is the only sitting commissioner. The agency normally seats five, with no more than three from the same party. Under Section 2(a)(3) of the Commodity Exchange Act, vacancies don’t impair the remaining commissioners’ authority to exercise the full Commission’s powers. Unlike the SEC, which requires a three-member quorum for most official action, the CFTC has no statutory quorum minimum.
That means Selig can legally initiate the ANPRM, issue guidance, and advance rulemaking on his own, a fact that he pointed out during the panel. Legal analysts have noted the one-member commission is technically uncharted territory and could invite scrutiny on deliberative-process grounds, but the statutory footing is clear.
Back to the “gaming” question in the CEA
Understanding why Selig needs to do all this requires a quick look at the statute he’s working with.
CEA Section 5c(c)(5)(C) gives the CFTC authority to prohibit event contracts that involve “gaming,” “terrorism,” “assassination,” “war,” or activities deemed contrary to the public interest. That language is operationalized through CFTC Regulation 40.11 — the rule that governs what prediction market exchanges can and cannot self-certify for trading.
The problem is that “gaming” is never defined in the statute. That single gap has fueled the bulk of state vs. federal litigation centered around the question: Is a sports outcome contract a derivative regulated by the CFTC, or a bet regulated by state gambling authorities? Courts have split, and the question has generated over a dozen active legal disputes.
Under the current self-certification process, a Designated Contract Market (DCM) like Kalshi can list a new contract the day before launch by certifying it complies with the CEA. The CFTC has a window to review and object. But where the agency never formally objected to certain contract types — including sports event contracts — it created a gray zone that states have rushed to fill.
Selig’s stated goal is to write the CFTC’s answers down: what qualifies for self-certification, what triggers a prohibited-category review, and what “gaming” actually means under Reg. 40.11. If the CFTC formally defines sports event contracts as outside the gaming prohibition, that tightens the federal preemption argument in every pending case.
There’s a catch, though. In the post-Loper Bright era — the 2024 Supreme Court decision that eliminated automatic judicial deference to agency interpretations — any new CFTC rule will face heightened court scrutiny. The agency can interpret the CEA, but it cannot rewrite it. The legal drafting will need to be precise, and even then, it could still face legal challenges.
From courtrooms to rulemaking
Selig isn’t waiting for rulemaking to defend the industry in court. His agency has been filing amicus briefs asserting federal preemption in state cases, and his February op-ed in the Wall Street Journal put it plainly: the CFTC will no longer sit on the sidelines while states challenge the CFTC’s exclusive jurisdiction over commodity derivatives.
The state legal campaign has not slowed. Massachusetts was the first to successfully force Kalshi to geofence its sports contracts, and that ruling quickly became a template for Nevada, New York, Tennessee, New Jersey, and Maryland. Tribal gaming groups have pursued parallel challenges in federal court. At the same time, a former Trump chief of staff recently launched a new advocacy coalition specifically targeting sports prediction markets, as the opposition front becomes more bipartisan.
Rulemaking doesn’t settle the preemption question — that’s a job for appellate courts — but it makes the federal argument harder to dismiss. Clear CFTC rules give platforms a written federal standard to point to. Without them, platforms have been defending themselves on self-certification language that the CFTC never explicitly endorsed.
The Khamenei market, Kalshi’s rulebook update, and why clarity matters
The stakes of “what can be self-certified” sharpened considerably last week. When U.S. and Israeli strikes on Iran prompted widespread reports of Supreme Leader Ali Khamenei’s death on Feb. 28, Kalshi’s “out of office” contracts contracts were halted and settled at the last traded price prior to the death event. The exchange cited an existing death-related carveout in its market rules and reimbursed all trading fees, but not all traders were satisfied with the response.
In a March 2 CFTC filing, Kalshi codified that carveout directly into Rule 6.3 of its exchange rulebook, formally authorizing settlement at the last traded price when a contract’s primary subject dies. The amendment also authorizes Kalshi to halt trading if it “reasonably believes that the death of such person has occurred, is imminent, or that circumstances giving rise to the death may be occurring.”
The filing is a direct product of the gray zone Selig is trying to close. Kalshi built a self-certification framework that included a death carveout — legally permissible under the current self-certification process — but the CFTC had never written explicit standards for whether or how platforms can structure such provisions. Democratic senators have already pushed Selig to prohibit contracts that resolve on individual deaths outright. The ANPRM process will almost certainly surface this as one of the harder definitional questions the agency has to answer.
The Khamenei episode also put a spotlight on how platforms handle geopolitically sensitive contracts differently. Polymarket’s international platform (not under CFTC jurisdiction) resolved based on “consensus of credible reporting” with no explicit death carveout, creating a separate dispute cycle. PredictIt’s contract treated death as one pathway to “vacating office” and resolved cleanly. Three platforms, three structures, three outcomes — all under conditions the CEA’s event contract language never explicitly addressed.
CFTC opens input channels ahead of rulemaking
On the same day as the Milken panel, the CFTC posted a broader statement on its regulatory direction, noting it is dedicated to “advancing regulatory clarity, market integrity, and responsible technological progress across the new frontier of finance.”
Harry Crane, Professor of Statistics at Rutgers University and a longtime proponent of prediction markets, praised the focus on innovation:
Innovation is crucial to advancing prediction markets.
Glad to see @CFTC leading on this front. https://t.co/8GanvV7Js2
— Harry Crane (@HarryDCrane) March 3, 2026
The agency is opening multiple formal input channels ahead of the rulemaking process: public roundtables, a Request for Input, the Innovation Advisory Committee, and a new “Innovation at the CFTC” page with a direct meeting request portal.
The CFTC has already tapped Kalshi, Polymarket, DraftKings, and FanDuel for its Innovation Advisory Committee — a clear signal of who the agency considers primary stakeholders in the event contracts space. The ANPRM comment period, when it opens, will be the formal opportunity for operators and traders to shape what “clear self-certification standards” actually look like on paper.
For platforms and industry groups, the time to engage is now, before the ANPRM even publishes. The questions the CFTC asks in that document will shape what answers are possible, and operators who want a seat at the table have a direct line: roundtables, the Innovation Advisory Committee, and the new [email protected] inbox. For traders, the trade-off is real: clearer rules mean less legal limbo, but some contract categories that exist today may not survive the formal definition process.
The numbers make the urgency hard to ignore. Kalshi and Polymarket alone combined for $17.9 billion in February notional volume — and that’s not counting Polymarket’s new U.S. platform. This market has outgrown the gray zone. After two years of regulatory ambiguity, Selig appears ready to write it down.
