The Commodity Futures Trading Commission’s Markets Oversight Unit has issued a prediction markets advisory reminding exchanges of their regulatory responsibilities as event contracts on trading platforms rapidly increase.
The guidance sets out the requirements under the Commodity Exchange Act for contract markets listing event contracts, including product offering rules and basic principles of market integrity. The department said the consultation aims to support innovation while ensuring that exchanges are consistent with existing regulations.
The notice also highlights considerations for sports-related event contracts, one of the fastest-growing areas of market prediction trading.
The advice comes as the tone of regulation has changed for the prediction markets. The previous administration tried to limit the expansion of event contracts into new categories, but current CFTC Chairman Michael S. Selig allowed more access after taking office in December.
Platforms such as Kalshi and Polymarket have contributed to the rapid expansion of prediction markets noted in the CFTC advisory. This growth accelerated after a court ruling cleared the way for contracts related to the 2024 US presidential election. Crypto.com soon launched sports prediction markets, and Kalshi later introduced similar offerings.
Polymarket, which previously operated an offshore platform offering sports trading, recently received a license to operate a US regulated exchange focused on sports markets.
The sector has also attracted political connections, as Donald Trump Jr. serves as an adviser to Kalshi and Polymarket, while Trump Media and Technology Group develops a market prediction product in partnership with Crypto.com.
