The Commodity Futures Trading Commission (CFTC) has voted to propose a rule prohibiting event contracts that allow betting on political events, citing a significant increase in such contracts since 2021. The proposal aims to prevent the "commodification" of political events and maintain the integrity of the democratic process.

Event contracts, offered by platforms like Kalshi and Polymarket, enable users to bet on future events, including political outcomes. However, CFTC Chair Rostin Behnam believes that allowing such contracts would exceed the agency's authority and mandate. The proposed rule would prohibit listing or clearing event contracts related to political events, gaming, war, terrorism, and assassination, deeming them "contrary to the public interest."

While Commissioner Caroline Pham disagrees with the proposal, calling it "misguided," the public will have the opportunity to comment on the proposed rulemaking. The CFTC's decision comes after issuing an order disapproving Kalshi's political event contract last year, which led to accusations of exceeding authority and support from investment firm Paradigm.

The proposal highlights the need for regulation in the rapidly expanding events market, ensuring that financial market regulators like the CFTC stay within their expertise and mandate.