The Commodity Futures Trading Commission’s Division of Market Oversight issued an advisory on prediction markets, reminding exchanges of their regulatory obligations as event contracts grow rapidly across trading platforms.
The guidance outlines requirements under the Commodity Exchange Act for designated contract markets listing event contracts, including product submission rules and core market integrity principles. The division said the advisory aims to support innovation while ensuring exchanges comply with existing regulations.
The notice also highlights considerations around sports-related event contracts, one of the fastest-growing areas of prediction market trading.
The advisory comes as the regulatory tone toward prediction markets has shifted. The previous administration sought to limit expansion of event contracts into new categories, but current CFTC Chairman Michael S. Selig has taken a more permissive approach since taking office in December.
Platforms such as Kalshi and Polymarket have helped drive the rapid expansion of prediction markets highlighted in the CFTC’s advisory. That growth accelerated after a court ruling in 2024 cleared the way for contracts tied to the US presidential election. Crypto.com soon launched sports prediction markets, with Kalshi later introducing similar offerings.
Polymarket, which previously operated an offshore platform offering sports trading, recently obtained licenses to launch a regulated US 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 is developing a prediction market product in partnership with Crypto.com.