Registered US exchanges can list new event contracts by simply filing a form asserting compliance with the law, enabling trading the very next day without prior approval. This rapid process is enabled by CFTC Rule 40.2, which allows self-certification instead of waiting for Commission consent.
However, this speed comes with a catch. Under the Dodd-Frank Act, the CFTC holds the power to prohibit certain event contracts post-listing if they involve prohibited activities like terrorism, assassination, war, or illegal conduct, and if they conflict with the public interest. This oversight is executed via Rule 40.11, which allows a 90-day review period where the Commission may suspend trading pending a final decision.
The law’s ambiguity around terms such as “involve,” “gaming,” and “public interest” has led to legal disputes, notably the 2023 ban on Kalshi’s contracts tied to congressional control, and a proposed but never finalized categorical ban in 2024. To clarify these uncertainties, the CFTC published a proposed rulemaking in June 2026 aiming to define these terms and establish a clear three-step public-interest test.
This system explains why new prediction markets can appear within days of relevant news, court rulings, or data releases: the exchanges do not need explicit permission beforehand. But it also reveals the legal vulnerability of these products, as the Commission retains the ability to intervene after launch.
