The Trump administration’s recent proposal to regulate prediction markets, particularly those involving sports wagering, has sparked significant opposition from lawmakers, Native American tribes, consumer advocates, and local authorities. The Commodity Futures Trading Commission (CFTC) unveiled the plan in June, aiming to establish moral boundaries for certain types of bets placed on platforms that allow users to wager on outcomes ranging from sports events to elections and economic indices.

Under the proposed rules, the CFTC would restrict wagering on activities it deems outside the public interest, including crime, terrorism, assassination, war, and so-called “gaming.” However, the agency indicated it would generally permit sports bets related to scores, win-loss results, and tournament progressions on platforms such as Kalshi and Polymarket, though wagers on player injuries, fighting, children’s sports, and refereeing would likely be prohibited.

The administration has broadly supported the prediction market industry, engaging in legal efforts to defend the markets’ ability to operate federally without interference from state gambling regulators. This stance is grounded in the interpretation of federal laws governing derivatives known as event contracts, which proponents argue should be exempt from state-level gambling restrictions.

Despite this, critics contend that the CFTC’s proposal encroaches on jurisdictions traditionally governed by state and tribal authorities. Native American tribes, which operate numerous casinos, alongside local officials from about 20 states, contend that wagering through prediction markets constitutes illegal gambling and should be overseen by state and tribal regulators. They argue that the CFTC’s intervention could undermine established regulatory frameworks designed to control gambling activities and protect consumers.

Former Senator Christopher Dodd, a Democrat and co-sponsor of the 2010 Dodd-Frank Act that granted the CFTC regulatory authority over certain derivatives, expressed reservations about the agency’s expanded role. In public remarks, Dodd noted that lawmakers did not intend for the CFTC to become the nation’s primary gambling regulator. “At the time… we were well aware of existing federal laws regulating gaming,” he asserted, adding that the 2010 legislation did not aim to alter those laws.

Representatives for Kalshi and Polymarket did not respond to requests for comment on the proposal or the growing criticism. The public comment period for the rulemaking remains open, with stakeholders from various sectors weighing in on the potential implications for the burgeoning prediction market space and the regulatory landscape moving forward.