---
type: claim
domain: internet-finance
description: First purpose-built sports prediction DCM submitted framework that would convert Staff Advisory guidance into binding regulatory requirements with explicit league engagement and data standards
confidence: experimental
source: Norton Rose Fulbright analysis of ProphetX CFTC application (November 2025)
created: 2026-04-21
title: ProphetX Section 4(c) conditions-based framework proposes codified sports contract preemption through uniform federal standards replacing ad-hoc no-action relief
agent: rio
sourced_from: internet-finance/2026-04-21-norton-rose-cftc-anprm-comprehensive-analysis.md
scope: structural
sourcer: Norton Rose Fulbright
supports: ["prophetx-section-4c-conditions-framework-codifies-sports-contract-preemption"]
related: ["cftc-licensed-dcm-preemption-protects-centralized-prediction-markets-but-not-decentralized-governance-markets", "prophetx-section-4c-conditions-framework-codifies-sports-contract-preemption", "section-4c-authorization-is-more-legally-durable-than-field-preemption-for-prediction-market-sports-contracts", "dcm-field-preemption-protects-all-contracts-on-registered-platforms-regardless-of-type", "prophetx-section-4c-conditions-framework-proposes-codified-sports-contract-standards", "prophetx-section-4c-conditions-based-framework-codifies-federal-preemption-through-uniform-standards", "cftc-anprm-prophetx-section-4c-framework-codifies-sports-contract-preemption-through-uniform-federal-standards"]

### Auto-enrichment (near-duplicate conversion, similarity=1.00)
*Source: PR #3594 — "cftc anprm prophetx section 4c framework codifies sports contract preemption through uniform federal standards"*
*Auto-converted by substantive fixer. Review: revert if this evidence doesn't belong here.*

related: ["cftc-licensed-dcm-preemption-protects-centralized-prediction-markets-but-not-decentralized-governance-markets", "prophetx-section-4c-conditions-framework-codifies-sports-contract-preemption", "section-4c-authorization-is-more-legally-durable-than-field-preemption-for-prediction-market-sports-contracts", "dcm-field-preemption-protects-all-contracts-on-registered-platforms-regardless-of-type", "cftc-anprm-prophetx-section-4c-framework-codifies-sports-contract-preemption-through-uniform-federal-standards"]


## Extending Evidence

**Source:** ProphetX CFTC ANPRM comments, April 2026

ProphetX's Section 4(c) proposal is architecturally more durable than field preemption because it provides explicit CFTC permission that directly overrides Rule 40.11's 'shall not list' prohibition, rather than arguing that sports contracts are authorized swaps despite Rule 40.11. This creates a fallback path if courts reject the preemption argument.


### Auto-enrichment (near-duplicate conversion, similarity=1.00)
*Source: PR #3675 — "cftc anprm prophetx section 4c framework codifies sports contract preemption through uniform federal standards"*
*Auto-converted by substantive fixer. Review: revert if this evidence doesn't belong here.*

## Extending Evidence

**Source:** ProphetX CFTC ANPRM comments, April 2026

ProphetX's Section 4(c) proposal is architecturally more durable than field preemption because it creates explicit CFTC permission that directly overrides Rule 40.11's 'shall not list' prohibition, rather than arguing around it. If 9th Circuit rejects preemption, Section 4(c) provides a fallback path that doesn't depend on field preemption doctrine.


### Auto-enrichment (near-duplicate conversion, similarity=1.00)
*Source: PR #3707 — "cftc anprm prophetx section 4c framework codifies sports contract preemption through uniform federal standards"*
*Auto-converted by substantive fixer. Review: revert if this evidence doesn't belong here.*

## Extending Evidence

**Source:** ProphetX CFTC ANPRM comments, April 2026

ProphetX's Section 4(c) proposal is architecturally more durable than field preemption because it provides explicit CFTC permission that directly overrides Rule 40.11's 'shall not list' prohibition, rather than arguing sports contracts are authorized despite the prohibition. This creates a fallback path if courts reject the preemption argument.


### Auto-enrichment (near-duplicate conversion, similarity=1.00)
*Source: PR #3721 — "cftc anprm prophetx section 4c framework codifies sports contract preemption through uniform federal standards"*
*Auto-converted by substantive fixer. Review: revert if this evidence doesn't belong here.*

## Extending Evidence

**Source:** ProphetX CFTC ANPRM comments, April 2026

ProphetX's Section 4(c) proposal is architecturally more durable than field preemption because it creates express CFTC permission that directly overrides Rule 40.11's 'shall not list' prohibition, rather than arguing sports contracts are authorized despite the prohibition. This provides a fallback path if courts reject the preemption argument in ongoing 9th Circuit litigation.

---

# ProphetX Section 4(c) conditions-based framework proposes codified sports contract preemption through uniform federal standards replacing ad-hoc no-action relief

ProphetX, the first purpose-built sports prediction DCM to file CFTC applications (November 2025), proposed a Section 4(c) conditions-based framework that would codify federal preemption for sports contracts through uniform standards. The framework converts the heightened compliance requirements from the Staff Advisory (league engagement, official data feeds, restricted participant lists) into binding regulatory conditions rather than discretionary no-action relief. This matters because it addresses the legal ambiguity threatening prediction market operators: instead of case-by-case staff letters, operators would have a clear statutory pathway. Norton Rose analysis indicates this proposal is 'the most constructive operator submission' and 'may shape the final rule structure.' The framework resolves the tension between state gambling enforcement (11 states with active actions, Arizona criminal charges) and federal preemption by creating explicit federal standards that preempt state law when met.


## Extending Evidence

**Source:** ProphetX CFTC ANPRM comments, April 2026

ProphetX's Section 4(c) proposal is architecturally more durable than field preemption because it provides explicit CFTC permission that directly overrides Rule 40.11's 'shall not list' prohibition, rather than arguing around it through implicit preemption. If 9th Circuit rejects preemption, Section 4(c) provides fallback path.


## Extending Evidence

**Source:** Indian Gaming Association ANPRM comments, April 2026

Tribal gaming operators filed ANPRM comments warning that Section 4(c) preemption would eliminate tribal gaming exclusivity under IGRA. IGA Chairman David Bean stated the CFTC classification 'wipes out the foundation of tribal exclusivity.' This adds a politically powerful stakeholder coalition (tribes have federal treaty protections and bipartisan congressional allies) to the preemption opposition beyond state AGs.


## Extending Evidence

**Source:** ProphetX CFTC ANPRM comments, April 2026

ProphetX's Section 4(c) proposal specifically addresses the Rule 40.11 paradox by creating explicit CFTC permission that overrides the 'shall not list' prohibition, rather than arguing around it through field preemption. This is architecturally more durable because it doesn't depend on the 'swaps are preempted' theory that is currently being litigated in multiple circuits.
