On June 10, 2026, the Commodity Futures Trading Commission (CFTC or Commission) published a Notice of Proposed Rulemaking (NPRM) seeking public comment on proposed amendments to CFTC Regulation 40.11 and the addition of a new Appendix F to the CFTC’s Part 40 rules (Appendix F).1 The proposed amendments to CFTC Regulation 40.11 implement Section 5c(c)(5)(C) (Special Rule) of the Commodity Exchange Act (CEA).

In publishing the NPRM, CFTC Chairman Michael Selig explained that the amendments “are designed to deliver regulatory clarity by setting out clear criteria for determining when an event contract ‘involves’ an enumerated activity”2 —terrorism, assassination, war, gaming or conduct that is unlawful under federal or state law (Enumerated Activity). The NPRM then establishes a new framework, including Commission guidance, that sets forth the factors the Commission should consider when determining whether a contract “involving” those Enumerated Activities is contrary to the public interest.3 Below, we discuss in greater detail the three-step inquiry the Commission proposes to make before determining whether an event contract is prohibited.4 The three-step inquiry is as follows: (i) the Commission must determine whether agreements, contracts, transactions, or swaps in an excluded commodity are based upon an occurrence, extent of an occurrence, or contingency and therefore qualify as “event contracts”; (ii) the Commission must determine whether the event contracts “involve” an Enumerated Activity; and (iii) if the Commission determines that the event contracts involve such activity, the Commission may block a contract from being listed if it undertakes a public interest analysis and determines the event contract is affirmatively against the public interest.5

The public comment period for the NPRM will close on July 27, 2026. Interested parties are encouraged to provide feedback, particularly on the new text that could alter both CFTC Regulation 40.11 and the proposed Appendix F that would be codified as Part 40 of the CFTC’s rules.The following client alert is not a comprehensive summary of the NPRM. However, the WilmerHale Futures and Derivatives Practice has identified 10 key takeaways from the NPRM as well as the CFTC’s recent actions related to event contracts and prediction markets. The WilmerHale Futures and Derivatives Practice is well-equipped to provide clients with assistance in submitting tailored responses to the NPRM.

1. The NPRM is the CFTC’s latest proactive move to demonstrate its jurisdiction over event contracts.

The NPRM comes after nearly two years of litigation over the scope of the Commission’s authority under the CEA’s Special Rule. In September 2023, the Commission disapproved a listing for congressional-control event contracts, based on a determination that those contracts involved “gaming” and “unlawful activity” under state law. In a subsequent challenge to the order, the US District Court for the District of Columbia held that the Commission had read “gaming” and “unlawful activity” too broadly;6 the DC Circuit then denied the CFTC’s request for a stay in October 2024, allowing the contracts to begin trading. The Commission ultimately withdrew its appeal in May 2025. That sequence left congressional-control contracts trading on a CFTC-designated contract market (DCM) and, more importantly, exposed the extent to which CFTC Regulation 40.11 lacked clear definitions and administrable limiting principles. The scope of event contracts then expanded beyond political markets. As DCMs began to offer sports and other event-based contracts, state regulatory authorities increasingly sought to apply state gambling and licensing laws to products listed on CFTC-registered exchanges, prompting litigation in multiple jurisdictions, including Nevada and New Jersey.7 Arizona filed a criminal case against a CFTC-registered prediction market operator, a move that quickly led to federal injunctive relief. These cases continue today.

In February 2026, the CFTC stepped in directly, filing a rare amicus brief in the Ninth Circuit and arguing that exchange-traded event contracts are swaps subject to the Commission’s exclusive jurisdiction, such that conflicting state regulation is preempted.8 To date, the CFTC has filed amicus in three cases.  The Commission then followed that litigation posture with a broader regulatory initiative, issuing an Advance Notice of Proposed Rulemaking (ANPRM) related to prediction markets in March 202610 and, together with the Department of Justice, suing Arizona, Connecticut, Illinois, New Mexico, New York, Minnesota, Rhode Island and Wisconsin in April through June 2026 to block state enforcement actions against prediction markets.11 Other cases continue to work through the courts—involving both DCMs and the CFTC as litigants. In some of these cases, opposing parties and courts have noted the tension between existing CFTC Regulation 40.11’s prohibition on “gaming” contracts and the CFTC’s decision to allow sports-related event contracts to continue trading. Against that backdrop, the NPRM is best understood as the Commission’s effort to translate its recent jurisdictional and policy arguments into a more formal regulatory framework for determining when event contracts “involve” gaming, unlawful activity or other enumerated subjects and when those contracts should be found contrary to the public interest.

2. The NPRM reflects a new approach to developing Commission rulemakings.

As was the case with the ANPRM, the NPRM identifies the CFTC Office of the General Counsel as the lead division responsible for the NPRM. Historically, proposed rules are generally developed by one of the operating divisions, like the Division of Market Oversight (DMO), with support provided by the Office of General Counsel and other offices within the Commission. For example, the prior administration’s attempt to amend CFTC Regulation 40.11 was led by the DMO in 2024.12This approach suggests that the Commission could move other priority rulemakings from the operating divisions to the Office of General Counsel, centralizing the development of new regulations and amendments to existing rules. This practice might allow the Commission to move more quickly given recent staffing shortages, which is important for event contract policymaking (about which we expect several additional releases). It also would be important if Congress adopts cryptocurrency market structure legislation and the CFTC is tasked with implementing new rules under ambitious legislative deadlines.

Interestingly, the NPRM only has a few references to the recently concluded ANPRM and the more than 3,500 comments received in response to that release.13  Given the wide range of questions posed in the ANPRM, we expect responsive comments will inform future Commission rulemakings. At the same time, the relatively modest references to those comments in the NPRM suggest that the NPRM may have been developed during the ANPRM public comment period.

3. The NPRM’s structure is a departure from the existing rule and prior proposed amendments.