CFTC Moves to Rein In Prediction Markets With Guidance, Rulemaking Review
The U.S. Commodity Futures Trading Commission (CFTC) announced two regulatory actions aimed at clarifying oversight of prediction markets, which include event contracts based on real-world outcomes like sports or elections. The Division of Market Oversight issued guidance reminding exchanges of compliance requirements, especially regarding insider trading and manipulation, and highlighted risks in sports-related contracts. An Advanced Notice of Proposed Rulemaking was also published, seeking public input on whether new rules are needed for these markets. CFTC Chair Michael Selig emphasized a commitment to assert regulatory authority over prediction markets, citing their growing significance. Industry advisor Peter Hammon noted that the CFTC mainly reiterated existing regulations and sought comment rather than introducing new policy, and that debate persists only over the classification of sports prediction markets as financial products versus gambling. Other countries generally classify these markets as gambling. The CFTC has indicated it will protect its jurisdiction in court, and insiders argue the main threat to U.S. sports prediction markets is a potential adverse Supreme Court ruling, as state-level regulation has proven unviable.
