NEW YORK, May 10 (Reuters) - The U.S. Commodity Futures

Trading Commission (CFTC) on Friday proposed a rule that would

ban listed derivatives used to bet on U.S. elections and other

major real world events, its chair said.

The CFTC voted in favor of the proposal, with three

commissioners supporting it while two did not back it.

The proposed regulations bans the listing and clearing of

so-called "event contracts," a type of futures contract which

have proliferated in recent years. Critics have said the

products could undermine the integrity of U.S. elections.

"Such contracts not only fail to serve the economic purpose

of the futures markets - they are illegal in several states and

could potentially and impermissibly preempt State

responsibilities for overseeing federal elections," CFTC chair

Rostin Behnam said in a statement ahead of the vote.

The proposal, which comes in a major presidential election

year, would ban "gaming" derivatives, which would also cover

products that allow bets on sporting events, as well as

calamities such as terrorism and assassination, the chair said.

The proposal comes after the CFTC was sued by online

marketplaces, including PredictIt, which the CFTC tried to shut

down, and New York-based exchange KalshiEx, whose application to

list event contracts was rejected.