The U.S. Commodity Futures Trading Commission (CFTC) has issued a warning to online betting exchanges, reinforcing that event contracts linked to criminal activities are strictly prohibited.

The reminder specifically targets prediction-based exchanges like Kalshi, which are regulated as derivative financial markets. Under CFTC Regulation 40.11, contracts referencing terrorism, assassination, war, gaming, or any unlawful activities are banned as they are deemed "contrary to the public interest."

This warning came after Kalshi launched contracts related to Luigi Mangione, the suspect in the UnitedHealthcare CEO Brian Thompson's killing. The contracts, which included predictions about Mangione's extradition and plea decisions, were removed within 48 hours following regulatory notice.

While U.S.-regulated exchanges must comply with these restrictions, offshore platforms like Polymarket continue to offer similar contracts. Polymarket, operating with cryptocurrency, currently hosts 10 Mangione-related contracts, with one contract alone attracting over $441,000 in wagers.

The prediction market industry faces ongoing criticism, with financial policy experts arguing it amounts to gambling on serious crimes. However, the industry recently gained ground when federal courts permitted betting on the 2024 presidential election. The regulatory landscape may shift further under a second Trump administration, which has promised significant deregulation efforts.

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