CFTC seeks public comment on prediction markets as regulator issues new advisory

The Commodity Futures Trading Commission [CFTC] has taken new steps toward regulating prediction markets. It issued fresh guidance to exchanges while launching a formal process to consider new rules governing event-based contracts.

In a pair of announcements on 12 March, the agency’s Division of Market Oversight released an advisory addressing the listing of event contracts. 

Also, the commission simultaneously opened an Advanced Notice of Proposed Rulemaking [ANPRM] seeking public comment on how prediction markets should be regulated.

The move comes as event-based trading platforms have grown rapidly in popularity, prompting regulators to examine how existing derivatives rules apply to these markets.

Advisory reminds exchanges of regulatory obligations

The CFTC’s Division of Market Oversight said the advisory is intended to help designated contract markets understand their responsibilities when listing event contracts.

The guidance highlights obligations under the Commodity Exchange Act, including compliance with exchange core principles and product submission requirements.

The advisory also notes that prediction markets are expanding into new areas, including contracts tied to sports-related outcomes, which may raise additional regulatory considerations.

According to the division, exchanges acting as front-line regulators should take proactive steps to ensure event-based markets evolve in a manner that remains compliant with federal derivatives law.

Regulator opens path to potential new rules

Alongside the advisory, the CFTC published an Advanced Notice of Proposed Rulemaking to gather feedback on whether new or amended regulations are needed for prediction markets.

The consultation seeks input on several areas, including:

• How existing derivatives rules apply to event contracts
• Which types of contracts might be prohibited as contrary to the public interest
• Potential economic and market impacts of prediction markets
• Cost-benefit considerations for future regulation

CFTC Chairman Michael S. Selig said the process marks the beginning of a broader regulatory review.

He stated that the initiative is intended to support responsible innovation in derivatives markets while reaffirming the agency’s jurisdiction over prediction markets.

Public comments will be accepted for 45 days after the proposal is published in the Federal Register.

Prediction markets draw growing regulatory attention

Prediction markets allow users to trade contracts tied to the outcome of real-world events, ranging from political elections and economic indicators to sports results and cultural milestones.

Interest in the sector has surged in recent years as platforms offering event-based trading have expanded, including decentralized versions operating on blockchain networks.

Regulators have increasingly examined whether such markets fall under existing derivatives laws and whether certain types of contracts could conflict with public interest protections.

The CFTC said feedback from the consultation will help inform potential future rulemaking related to prediction markets.

Final Summary

• The Commodity Futures Trading Commission issued new guidance on event contracts while opening a consultation on potential regulations for prediction markets.
• The agency’s move signals growing regulatory attention as event-based trading platforms expand across traditional and blockchain-based markets.