WASHINGTON, March 12 (Reuters) - The U.S. Commodity Futures Trading Commission on Thursday called for public comment ahead of a regulatory proposal it said would shape government oversight of the burgeoning market for events contracts and prediction markets.

In a public notice, the agency drew attention to the need for protections against manipulation and the possibility of trading on margin as well as considerations for what kinds of contracts should be prohibited in the public interest, such as wagers on terrorism and military action.

Though the CFTC has considered regulating prediction markets for nearly two decades, they have ​exploded in popularity since ​the 2024 U.S. ⁠elections, when their real-time probabilities proved more accurate than polling in predicting Donald Trump's victory.

The CFTC is battling for jurisdiction over such markets with state gaming regulators who claim they have oversight because the wagers are tantamount to traditional gambling.

Democrats on Capitol Hill and other critics have also expressed strong concerns, saying they are obvious targets for manipulation. The prediction market Kalshi was sued earlier this month after refusing to pay out on wagers on the downfall of former Iranian Supreme Leader Ayatollah Ali Khamenei.

Events contracts offer tradable yes-or-no wagers ​that allow users to bet on a wide range of ​real-world events ⁠from sports to politics and the economy. 

Thursday's notice appeared to acknowledge many recent controversies and possible dangers inherent in the events contracts. The CFTC asked public commenters to consider whether there can be ambiguities in commonly understood meanings of terrorism and assassination, how to distinguish cyber terrorism from other cyber attacks, whether all war can encompass all military activity, and how to consider whether insider information from federal government employees is likely to affect markets.

Members of the public will have six weeks to submit their comments for the CFTC's consideration in drafting any proposal.

(Reporting by Douglas Gillison in Washington)