(Bloomberg) -- A top Wall Street regulator is considering an outright ban on using derivatives to bet on US elections as part of a crackdown on so-called event contracts, according to people familiar with the plans.

The Commodity Futures Trading Commission’s draft proposal would boost oversight of the contracts that have let people wager on real-world outcomes such as monetary policy, lunar landings and music awards. Beyond elections, the CFTC may also prohibit some contracts on sports and calamities such as global health crises, said the people, who asked not to be identified discussing the internal deliberations. 

The regulator declined to comment on its plans. 

US officials have been grappling with how to police event contracts for the past several years amid a debate over what runs afoul of US rules. The regulator has long given exchanges significant leeway to list derivatives. 

Officials can stop contracts relating to “terrorism, assassination, war” and “gaming,” which the CFTC has never defined. They can block contracts deemed to be “contrary to the public interest.” 

Despite those ambiguities, multiple exchanges have charged into event contracts, seeking to cash in and broaden the appeal of a niche class of binary options. Earlier this month, Susquehanna International Group announced a trading desk dedicated to trading contracts listed on Kalshi Inc. 

Read More: Susquehanna Starts Trading Desk for Event Contracts on Kalshi

Kalshi, which is registered with the CFTC and has raised position limits on some of its contracts to $7 million, is suing the agency over its refusal to green light its plans for contracts on election outcomes. Rostin Behnam, the agency’s chairman, has said listing such derivatives could turn the regulator into an elections integrity cop. 

Read More: Kalshi’s Bid to Offer Bets on US Elections Turned Down by CFTC

The CFTC’s rule proposal is now circulating internally among the agency’s five commissioners. Its scope could change and the agency may hold a public meeting on the plan next month, according to the people. To move ahead, a majority of the agency’s commissioners need to vote to release the proposal and seek public comment. Officials could then make changes before holding another vote months later to finalize it.

The CFTC’s effort is already garnering pushback from at least one Republican lawmaker. Tommy Tuberville, a senator from Alabama, sent a letter to the CFTC this week asking officials to “proceed deliberately and transparently” and debate the measure at a public meeting.

“Moving forward with a rule that limits event contracts would stifle innovation,” he added.

(Updates with lawmaker comment in final two paragraphs.)

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