For over two decades, the Commodity Futures Trading Commission (the Commission or CFTC) has exercised regulatory authority over prediction markets, which, in the U.S., are generally registered with the CFTC as Designated Contract Markets (DCMs). But the recent proliferation and growth of prediction markets in the U.S. has surfaced questions about the oversight of prediction markets, including the types of event contracts DCMs should be allowed to offer and the appropriate process for review and approval of such contracts. On June 12, 2026, the CFTC published in the Federal Register a Notice of Proposed Rulemaking (NPRM)[1] aimed at addressing some of these questions. Specifically, the NPRM proposes amendments to the CFTC’s Part 40 regulations to address the special rule for review and approval of event contracts under Section 5c(c)(5) of the Commodity Exchange Act (CEA) (the Special Rule).[2] The Special Rule as outlined by the CEA provides the CFTC discretion to determine whether event contracts listed on DCMs are contrary to the public interest if the contract involves unlawful activity, terrorism, assassination, war, gaming, or another activity that the Commission has determined by rule or regulation to be similar to those “Enumerated Activities.” Part 40 of the CFTC’s regulations governs the submission of new products, rule changes and requests for approval by registered entities to the CFTC. The NPRM proposes three principal changes, to the Part 40 regulations. First, it would define when event contracts “involve” an activity enumerated in the Special Rule. Second, it would define “gaming” for purposes of the Special Rule. Third, the Commission proposes public-interest factors to guide its public interest review and more details on how the CFTC’s 90-day review process would proceed. This alert memorandum describes the primary features of the NPRM and its implications for DCMs listing event contracts, prediction-market operators, market participants, and firms whose employees may trade event contracts. In particular, we examine the Commission’s proposed interpretations of “involve” and “gaming” in the context of the Special Rule, the public-interest factors that would apply to different categories of event contracts, and the process the Commission proposes for reviewing event contracts under the Special Rule. We also consider how the NPRM would implement changes to the Commission’s prior position on political event contracts. It follows our prior alert memoranda, Prediction Markets for Those Who Don’t Predict (and Those Who Do)[3] and Betting on Company Information: Prediction Market Considerations for Public Companies,[4] which provided an overview of the regulatory framework applicable to prediction markets and addressed recent developments.