The Commodity Futures Trading Commission unveiled a sweeping 267-page proposal that would ban prediction markets like Kalshi and Polymarket from offering contracts on player injuries, officiating decisions, and in-game props. The framework targets what the agency calls "discrete-action contracts involving specific participants" while leaving most game-outcome trades intact. Sports-related contracts have driven massive growth for these platforms.

Monthly trading volume on both platforms exploded from under $5 billion in September 2025 to $24 billion by April 2026. Sports trades account for 80% of Kalshi's volume since July 2024, with Polymarket seeing 39% sports-related activity. This rapid expansion has drawn criticism from lawmakers and regulators who argue these markets function as gambling, particularly for sports events.

The NBA and NFL have formally requested restrictions on injury and officiating-related contracts, citing manipulation concerns. Legal battles continue across multiple states, while Sens. John Curtis and Adam Schiff push federal legislation to ban contracts resembling sports bets. A soldier's alleged $400,000 profit trading on classified information about Venezuela's president has intensified scrutiny.

Despite the restrictions, the CFTC defends sports outcome contracts as legitimate economic indicators, describing teams as "economic enterprises" that provide public utility. Chairman Michael Selig frames the rules as balancing congressional oversight with market innovation. Public comment runs for 45 days before any implementation.