The Commodity Futures Trading Commission (CFTC) has issued a warning to prediction market firms regarding their practices in submitting event contracts, highlighting concerns over the use of generic self-certification methods.
Regulatory Advisory on Event Contracts
In an advisory released on Friday, the CFTC, which oversees derivatives markets, expressed its discontent with how companies like Kalshi, Coinbase, Polymarket, and Crypto.com have been handling contract submissions. The agency emphasized that firms should avoid using broad, template-like certifications and instead provide detailed information for each event contract.
This advisory marks the second instance in recent months where the CFTC has cautioned against overly generalized submissions. It noted that many designated contract markets continue to self-certify event contracts without adequately detailing the terms and conditions for each variant, nor providing sufficient analysis regarding compliance and methodology.
The CFTC stated that bypassing the proper certification process could hinder its ability to ascertain whether all necessary information has been provided and whether the contracts meet compliance standards. However, the agency acknowledged that similar event contracts could be certified as a group, allowing for consolidated filings with shared documents.
The rapid expansion of the event contracts market, particularly in sports betting and political predictions, has led to a somewhat improvised regulatory environment, given the industry's relative inexperience and the CFTC's uncertain legal standing.
Legal ambiguity persists regarding the CFTC's role as the primary regulator of prediction markets, a matter that may soon require judicial clarification, potentially reaching the U.S. Supreme Court. CFTC Chairman Mike Selig has made it a priority to assert the agency's authority over event contract platforms, even as several states pursue actions against these businesses for alleged illegal sports betting.
On the same day, the CFTC also announced an extension of the regulatory status for Kraken's platform, the Kraken Derivatives Exchange, which had been designated as "dormant" since early 2025. The CFTC's approval allows Kraken to prepare for renewed operations after its acquisition of Bitnomial earlier this year.