CFTC Reminds Prediction Markets That Crime-Related Betting Contracts Are Illegal
The U.S. Commodity Futures Trading Commission (CFTC) has issued a warning to online prediction markets, reinforcing that event contracts linked to criminal activities are strictly prohibited.
Handcuffed man sitting in chair
Under CFTC Regulation 40.11, prediction markets cannot offer contracts related to:
- Terrorism
- Assassination
- War
- Gaming
- Any unlawful activities under state or federal law
The warning came after Kalshi, a regulated betting exchange, launched contracts related to Luigi Mangione, the suspect in the UnitedHealthcare CEO Brian Thompson killing. The contracts, which included questions about Mangione's extradition and potential plea, were quickly removed following regulatory notice.
While U.S.-regulated exchanges must comply with these restrictions, offshore platforms like Polymarket continue to offer such contracts. Polymarket currently hosts 10 Mangione-related markets, with one contract attracting over $441,000 in wagers.
The prediction market industry faces ongoing criticism despite recent legal victories, including permission to offer 2024 presidential election betting. Critics, including Better Markets' Cantrell Dumas, argue these markets essentially gamble on serious criminal matters.
The regulatory landscape may shift under a second Trump administration, as the president-elect has promised significant deregulation, pledging to eliminate 10 federal regulations for each new one implemented.
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