CFTC issues new guidance tightening rules for prediction markets
The U.S. Commodity Futures Trading Commission (CFTC) has issued new guidance on prediction markets and event contracts. The regulator reminded exchanges that such products fall fully under the Commodity Exchange Act (CEA).
The document states that platforms must strictly comply with Part 38 rules and the requirements of Core Principle 3 for designated contract markets (DCM).
These rules define the procedures for listing, monitoring, and overseeing trading products. The CFTC emphasized that the growing popularity of prediction markets requires stricter regulatory oversight. Exchanges must take existing legislation into account when launching new contracts.
Exchanges must strengthen internal oversight
The regulator noted that DCMs act as the primary regulators of their own markets. This means exchanges are responsible for reviewing new products before launching them. Platforms must analyze contract structures, monitor trading activity, and regularly assess compliance with regulatory rules.
As trading volumes grow and products become more complex, supervisory requirements are expected to increase. The CFTC also expects more transparent procedures for submitting and approving new contracts. Exchanges should not treat prediction markets as a regulatory gray area.
Special focus on sports contracts
The regulator also singled out contracts tied to sporting events. According to the CFTC, some of these products may raise additional legal and political concerns. The agency does not introduce a direct ban on such contracts.
However, it warns that exchanges must demonstrate that their products are not disguised forms of gambling. This implies a higher standard of review for platforms offering such markets. This is particularly relevant for platforms dealing with political or socially significant events.
Prediction markets remain under derivatives regulation
The CFTC emphasized that innovation in prediction markets is acceptable only within the framework of existing regulations. Platforms that previously treated event contracts as secondary products must reconsider their listing practices. This includes strengthening monitoring, disclosure, and compliance procedures.
The agency signaled that it will closely monitor developments in the sector. As the industry grows, compliance requirements may become even stricter. As a result, prediction markets must evolve within the existing derivatives regulatory framework in the United States.
Recently we wrote that the state of Utah plans to restrict the operation of prediction market platforms, including Kalshi and Polymarket. Bill HB243, which focuses on revising gambling regulations, has been sent to the governor for signature.
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