CFTC Issues Advisory as Event Contracts Expand

CFTC Advisory on Prediction Markets Amid Rapid Event Contract Growth

• The Commodity Futures Trading Commission (CFTC) issued guidance reminding exchanges of regulatory obligations as prediction markets expand.
• The advisory outlines requirements under the Commodity Exchange Act for designated contract markets, focusing on product submission and market integrity.
• Sports-related event contracts are highlighted as a rapidly growing area in prediction market trading.
• CFTC Chairman Michael S. Selig has adopted a more permissive approach to prediction markets since December, contrasting with the previous administration’s restrictive stance.
• Platforms like Kalshi and Polymarket have driven expansion, supported by a court ruling in 2024 allowing US presidential election contracts.

The CFTC’s advisory emphasizes regulatory compliance amid rapid growth in prediction markets, particularly in sports-related event contracts. This shift is facilitated by a more permissive regulatory environment under current leadership.