CFTC Seeks Public Comment on Notice of Proposed Rulemaking Concerning Event Contracts Involving Enumerated Activities

What Changed

• - The NPRM would amend CFTC Regulation 40.11 to embed a formal analytical framework for assessing whether an event contract involves an activity enumerated in CEA Section 5c(c)(5)(C) and, if so, whether it is contrary to the public interest.
• The NPRM would add Appendix F to Part 40 to set out the factors, tests, and procedural steps the Commission will apply when reviewing specific event contracts referencing enumerated activities.
• The proposal would define key statutory terms, including at minimum “involve” and “gaming,” to clarify when an event contract is considered to touch an enumerated activity under CEA Section 5c(c)(5)(C).
• The NPRM would establish a 90‑day review process for the Commission to evaluate event contracts that may implicate enumerated activities, including procedural protections such as notice, opportunity for comment, and a structured public‑interest analy
• The proposed framework would codify public‑interest factors the Commission will apply when deciding whether a particular contract involving an enumerated activity is contrary to the public interest and therefore ineligible for listing or clearing.
• The NPRM is explicitly positioned as narrowly tailored to one aspect of the CFTC’s March 2026 Advance Notice of Proposed Rulemaking on prediction markets and is expected to be complemented by further rulemakings on other aspects of prediction markets

Suggested Considerations

• Map and inventory all existing and planned event contracts listed or cleared through CFTC‑registered entities to identify those that may “involve” terrorism, assassination, war, gaming, or conduct unlawful under federal or state law.
• Conduct a legal analysis of how the proposed definitions of “involve” and “gaming” would apply to your current product set, particularly sports, political, entertainment, and other contest‑based contracts, and document the rationale.
• Review and update internal product‑approval and new‑contract listing procedures to incorporate the proposed 90‑day CFTC review process, including timelines, documentation standards, and decision gates tied to Section 5c(c)(5)(C).
• Develop or update written policies and controls to ensure that contracts potentially involving enumerated activities are escalated for legal, compliance, and regulatory‑affairs review before submission to the CFTC.
• For DCMs and SEFs, enhance product‑submission templates to clearly address the proposed Appendix F public‑interest factors, including description of the underlying event, potential for unlawful activity, market integrity risks, and consumer‑protection considerations.
• Assess whether any current or planned contracts referencing sporting events, political contests, or similar “gaming” activities would likely be deemed contrary to the public interest under the proposed framework and prepare contingency plans for delisting, redesign, or reclassification.

Key Dates

Who is Affected