MCAI Lex Vision: MindCast Files Second Comment in the CFTC Prediction Markets Rulemaking — Same Day the Proposal Drops
MindCast Asked for This Rulemaking on April 17. The CFTC Delivered It in 41 Days. Here Is Our Second Filing — Submitted the Day the Proposal Dropped.
On June 10, 2026, the Commodity Futures Trading Commission published its Notice of Proposed Rulemaking on prediction markets — Prediction Markets; Public Interest Determinations, RIN 3038-AF65 — proposing to rewrite Rule 40.11, define “gaming,” and establish the 90-day public interest review framework governing event contracts. The Commission announced the proposal and call for comments in Press Release 9249-26; comments are due 45 days after Federal Register publication, through the CFTC Comments Portal. MindCast AI LLC filed its comment the same day the proposal dropped.
The filing is MindCast AI’s second in this docket. The first, submitted April 17, 2026 at the ANPRM stage, requested that the Commission convert the Advance Notice into a Notice of Proposed Rulemaking focused on CEA section 5c(c)(5)(C) and Rule 40.11 within ninety days of the April 30 comment close. The Commission delivered the conversion in forty-one days — on the same RIN, centered on the same terms the April filing identified, carrying forward the recreation-or-entertainment element of the gaming definition the filing proposed, and relocating the filing’s economic-function inquiry to the public interest factors at proposed § 40.11(a)(5)(i).
The June 10 comment engages the proposal on the architecture the Commission chose and identifies five curable gaps: the structural definition of gaming the Commission should adopt over the colloquial one, the deemed-concluded provision that lets agency silence function as approval without a record, the missing pendency disclosure for contracts trading under active review, the short-duration contract gap the 90-day clock cannot reach, and the unanswered retroactivity question on which pending litigation under 7 U.S.C. § 25(b) now turns.
The full comment as filed follows.
Submitted as a public comment to the Commodity Futures Trading Commission in response to the Notice of Proposed Rulemaking, Prediction Markets; Public Interest Determinations, RIN 3038-AF65 (Commission-Approved Pre-Publication Version, June 10, 2026). MindCast AI LLC previously filed a comment in this docket on April 17, 2026, in response to the Advance Notice of Proposed Rulemaking, 91 Fed. Reg. 12516 (Mar. 16, 2026), addressing Question 19 and requesting conversion of the Advance Notice into a Rule 40.11 rulemaking. The present comment builds on that filing.
QUESTION PRESENTED
Whether the proposed amendments to 17 C.F.R. § 40.11 — which adopt the colloquial definition of “gaming,” permit a review to conclude by Commission silence without findings, allow contracts under review to trade until prohibited, leave contracts that settle within the review window beyond the reach of the determination process, and remain silent on the provision’s retroactive interpretation — supply the administrable, litigation-durable framework the Commission’s preemption posture and the pending private enforcement docket require.
I. Summary of Comment
MindCast AI LLC supports the Commission’s decision to convert the Advance Notice into a Notice of Proposed Rulemaking focused on CEA section 5c(c)(5)(C) and Rule 40.11. MindCast AI requested exactly that conversion, within ninety days of the April 30 comment close, in its April 17 filing; the Commission delivered it in forty-one. MindCast AI also supports the first element of the proposed gaming definition — activity participants typically engage in for recreation or to entertain others — which tracks the first element of the definition proposed in the April 17 filing.
Five gaps remain, and each one is curable within the structure the Commission has already built. First, the alternative structural definition of gaming the Commission floated for comment is more administrable than the primary colloquial definition, and the Commission should adopt it. Second, the deemed-concluded provision in proposed § 40.11(e)(1)(ii) permits agency silence to function as approval without any record, inside a rulemaking whose preamble otherwise runs entirely on reasoned-record discipline; a minimal concluding-notice requirement cures the defect without sacrificing the streamlining the Commission seeks. Third, the Commission acknowledges that contracts contrary to the public interest will trade during the 90-day review and that a prohibition order will close out participant positions after the fact; a pendency-disclosure requirement addresses the reliance harm the Commission itself identifies. Fourth, the proposed review timeline cannot reach contracts that settle before the review can conclude — or even commence — leaving the contract categories that dominate current platform volume structurally outside the determination process; the Commission should either adopt an expedited track for short-duration contracts or state expressly that consolidated category review under proposed § 40.11(c)(4) is the intended mechanism governing them. Fifth, the proposal recharacterizes § 40.11(a) from a standing prohibition into a determination-contingent one without stating whether the recharacterization reflects the Commission’s reading of the existing rule or a prospective change; private litigation under 7 U.S.C. § 25(b) now turns on the answer, and the docket benefits from the Commission supplying it either way.
II. The Prior Submission and What the Proposal Adopted
The April 17 filing identified the structural instability driving the nationwide litigation web: the Commission was asserting exclusive jurisdiction and preemption across multiple circuits while its own docket conceded that the governing definition of “gaming” remained open. The filing requested five actions. The Commission adopted the first — conversion to a Rule 40.11 NPRM — on the timeline requested. The Commission adopted the recreational-purpose element of the second, the proposed textual definition. The Commission declined the remaining three: affirmative approval under Rule 40.3 for enumerated-activity contracts, a modified economic-purpose screen, and a non-displacement clause.
MindCast AI does not relitigate the declined requests here, and one of the three was relocated rather than declined. The preamble rejects the pre-CFMA economic purpose test as a definitional screen — then places its content at proposed § 40.11(a)(5)(i), where hedging utility, price-basing utility, and meaningful-information production operate as the first mandatory public interest factor every covered contract must face. The economic-function inquiry the April 17 filing proposed at the classification gate now sits at the public interest verdict, doing the same analytical work one stage later. MindCast AI supports the relocation: a utility inquiry applied through the structured 90-day record, with the written-findings requirements of proposed § 40.11(e)(2), delivers the deliberative-record function the April 17 filing argued the Commission’s litigation posture required. The present comment addresses the proposal on the architecture the Commission chose, and identifies where that architecture remains incomplete on its own terms.
III. The Commission Should Adopt the Alternative Structural Definition of Gaming
The preamble invites comment on an alternative definition grounded in the structural features that distinguish games from other activities — activity created by its rules, in which all participants whose conduct determines the outcome operate within the activity itself. The Commission should adopt the alternative, for three reasons.
First, the structural formulation is self-applying where the colloquial formulation requires characterization. The primary definition’s first element — activity participants “typically engage in for purposes of recreation or to entertain others” — asks the Commission to characterize the participants’ purpose, an inquiry that invites dispute at the margins the Commission’s own request for comment identifies: game shows, reality competitions, pageants, and talent contests. The structural formulation resolves the same margins by asking only where the outcome-determining conduct occurs. Participants in a quiz show operate within an activity created by its rules, and their conduct within the activity determines the outcome: gaming. A music competition decided by audience voting places the outcome-determining conduct — the vote — outside the performance activity, in the hands of non-participants exercising evaluative judgment: a contest, structurally identical to the election analysis the preamble already adopts. A pageant decided by a judging panel’s holistic evaluation resolves the same way. The structural definition answers the Commission’s open question without case-by-case purpose characterization.
Second, the structural definition hardens the elections holding. The preamble reasons that elections are not gaming because outcomes turn on voter judgment formed beyond the discrete activity, not on participant skill during it — a structural argument wearing colloquial clothing. Adopting the structural definition aligns the rule text with the actual logic of the Commission’s own examples: the Cy Young Award, the Nobel Prize, the Olympic host-city selection, and game attendance all fall outside gaming for one consistent reason — the outcome-determining conduct sits outside the activity. One test, uniformly applied, is the administrable standard courts applying independent judgment under Loper Bright Enterprises v. Raimondo will credit.
Third, the structural definition closes the manufactured-purpose loophole the colloquial definition opens. A listing entity facing the primary definition can argue that a given competition is conducted “primarily” for commercial, charitable, or informational purposes rather than recreation or entertainment, converting every novel product into a purpose dispute. The structural definition leaves no purpose element to manufacture.
IV. The Deemed-Concluded Provision Requires a Minimal Record
Proposed § 40.11(e)(1)(ii) provides that if the Commission issues no order by day 90, the contracts under review may be, or continue to be, listed and cleared, and the review “shall be deemed concluded.” The preamble justifies the provision as streamlining — the Commission need not issue approval orders.
Streamlining is a legitimate objective, and the provision’s defect is narrow. As proposed, a review the Commission formally commenced — by written determination identifying the contracts, the enumerated activity, the contract terms at issue, and the factors warranting review — can terminate in favor of listing with no record at all of what the Commission considered or why it did not act. The asymmetry is stark on the face of the rule: a prohibition order requires written findings addressing each factor, weighing factors favoring listing against those disfavoring it, and explaining consistency with precedent; a non-prohibition outcome requires nothing. A reviewing court asked to evaluate a subsequent prohibition order’s consistency with “prior Commission determinations” will find that the rule generates no record of the determinations silence produced. The gap undermines the consistency-discipline the Commission built into § 40.11(e)(2)(iii), and it exposes deemed-concluded outcomes to characterization as unreviewable, unreasoned agency action precisely where the Commission’s preemption posture depends on the opposite characterization.
The cure costs almost nothing. The Commission should amend § 40.11(e)(1)(ii) to require, within ten days of a review concluding without an order, a brief concluding notice — posted to the Commission’s website like the initiating determination — stating that the review concluded without an adverse determination and identifying the factors the Commission considered. A one-page notice preserves the streamlining objective, completes the precedent record that § 40.11(e)(2)(iii) requires future orders to engage, and converts silence from a record gap into a record entry.
V. Pendency Disclosure Addresses the Reliance Harm the Commission Identifies
The preamble acknowledges the consequence of post-listing review candidly: contracts that are contrary to the public interest may trade during the review period, and market participants who transacted in them will have their positions closed out after a prohibition order. The Commission describes the close-out as the appropriate result. Appropriate or not, the result imposes the loss on the participants least able to price it — retail traders who entered positions with no knowledge that the contract sat under an active § 40.11 review.
Behavioral economics supplies the reason notice matters here. Participants in event-contract markets systematically underweight low-probability procedural risks the platform does not display at the point of transaction; an active regulatory review that can extinguish the contract is exactly such a risk. The Commission has already decided to post the initiating written determination on its website under proposed § 40.11(c)(3). One incremental step completes the disclosure chain: require the registered entity to display, on the contract’s trading interface for the duration of the review, a standardized notice that the contract is subject to a pending Commission review under § 40.11 and may be prohibited before settlement. Listing continues, trading continues, the registered entity bears a trivial implementation cost, and the participants who will bear the close-out loss acquire the information needed to price it. The disclosure also strengthens the Commission’s litigation position: a prohibition order that closes out positions taken after conspicuous notice forecloses the reliance-interest objection the preamble currently leaves open.
VI. The Review Timeline Cannot Reach Short-Duration Contracts
The proposed determination process operates on a clock the contracts it governs routinely outrun. Review must commence within 10 days of listing. The staff statement of concerns arrives by day 15. The Commission’s order can issue as late as day 90, with a 100-day backstop from the listing date — and suspension during review occurs only by Commission request, which no provision compels the registered entity to honor. Set those intervals against the products that dominate current event-contract volume: contracts on individual games, matches, and tournament stages frequently list days before the underlying event and settle immediately upon its conclusion. A contract listed seventy-two hours before the underlying game settles before a review can formally commence. A contract listed two weeks before settlement settles before the staff statement of concerns is due. A prohibition order directed at a settled, paid-out contract prohibits nothing.
The consequence is structural rather than marginal: the contract categories most likely to raise the public interest concerns the Commission’s own sports-specific factors identify — injury props, officiating-call contracts, altercation contracts, discrete-action props, all typically listed game-by-game on short windows — are precisely the categories the determination process cannot reach in individual form. The proposal nowhere acknowledges the gap, and the omission leaves the rule open to the objection that its enforcement mechanism is unavailable against its most sensitive subject matter.
One provision already in the proposal supplies most of the answer, and the Commission should say so expressly. Proposed § 40.11(c)(4) permits consolidation of multiple submissions involving the same underlying event or a substantially similar set of underlying events, across multiple registered entities, with a single group order resolving the consolidated review. Category-level review with prospective effect reaches recurring short-duration contract types that individual review cannot: a group order finding, for example, that single-game officiating-call contracts as a category are contrary to the public interest governs every future listing in the category, regardless of any individual contract’s settlement date. Consolidated review is, in operation, the rule’s only viable control mechanism for short-duration contracts — but the preamble describes consolidation as an efficiency measure, not as the governing mechanism for an entire product class.
The Commission should take one of two actions. Preferably, amend § 40.11 to add an expedited determination track for contracts whose stated settlement date falls within the standard review timeline — compressed intervals, with the existing procedural protections scaled proportionately — or a tolling provision under which a contract subject to an initiated review may not settle before the review concludes. In the alternative, the Commission should state expressly in the final rule’s preamble that consolidated category review under § 40.11(c)(4), with prospective effect on future listings, is the intended mechanism through which the determination process governs recurring short-duration contract types. Either action closes the gap. Silence leaves the rule’s most sensitive territory governed by neither.
VII. The Commission Should State the Retroactive Reach of Its Reinterpretation
Proposed § 40.11(a)(1) replaces the current rule’s standing prohibition — “shall not list for trading or accept for clearing” — with a determination-contingent structure under which contracts become unlawful to list only upon Commission order. The preamble describes the change as removing uncertainty about whether a public-interest finding is necessary to prohibit trading and clearing.
The description leaves the dispositive question open: does the Commission read existing § 40.11(a)(1) as having always required a determination, or does the proposal change the rule’s operation prospectively? Active litigation turns on the answer. A private action under 7 U.S.C. § 25(b) currently pending in federal district court alleges that registered entities violated the existing rule’s prohibition by listing sports event contracts without any Commission determination. Defendants in that action and any follow-on actions will cite the preamble as the Commission’s authoritative reading that no self-executing prohibition ever existed; plaintiffs will respond that the Commission’s 2012 and 2024 orders — which the preamble now repudiates — reflected the agency’s contemporaneous reading. The Commission need not, and should not, opine on any pending case. The Commission should, however, state expressly in the final rule’s preamble whether its interpretation of the determination requirement describes the existing rule or only the amended one. Either answer serves the docket better than silence: clarity is the product this rulemaking exists to supply, and the largest remaining ambiguity in the prediction-markets legal architecture is now one the Commission created.
VIII. Specific Requests
Based on the foregoing, MindCast AI LLC respectfully requests that the Commission take the following actions:
Adopt the alternative structural definition of “gaming” set out in the preamble — activity created by its rules in which all participants whose conduct determines the outcome operate within the activity itself — in place of the primary colloquial definition in proposed § 40.11(b)(1), and apply it to resolve the game-show, reality-competition, pageant, and talent-competition questions on which the Commission requested comment;
Amend proposed § 40.11(e)(1)(ii) to require a brief public concluding notice, within ten days of any review concluding without an order, stating that the review concluded without an adverse determination and identifying the factors considered;
Add to proposed § 40.11(c) a requirement that registered entities display a standardized pendency notice on the trading interface of any contract subject to an active review under this section, for the duration of the review;
Amend proposed § 40.11 to add an expedited determination track or settlement-tolling provision for contracts whose stated settlement date falls within the standard review timeline, or in the alternative, state expressly in the final rule’s preamble that consolidated category review under proposed § 40.11(c)(4), with prospective effect on future listings, is the intended mechanism governing recurring short-duration contract types; and
State expressly, in the final rule’s preamble, whether the determination-contingent structure of proposed § 40.11(a)(1) reflects the Commission’s interpretation of existing § 40.11(a)(1) or operates prospectively only.
Commission staff may contact the undersigned for any clarification concerning this comment. MindCast AI LLC welcomes the opportunity to supply additional analysis at the Commission’s request.
Noel Le, J.D. Founder and Architect, MindCast AI LLC Bellevue, Washington mcai@mindcast-ai.com
MindCast AI LLC is a predictive game theory and behavioral economics AI firm specializing in complex litigation, geopolitical risk intelligence, and innovation ecosystems. MindCast AI publishes falsifiable institutional foresight analysis at www.mindcast-ai.com. The firm’s prediction-markets analytical corpus, including its April 17, 2026 comment in this docket, is indexed at www.mindcast-ai.com/p/cftc-rin-3038-af65. Contact mcai@mindcast-ai.com to partner with us on Predictive Game Theory in Law and Behavioral Economics.