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- CFTC eases reporting obligations for prediction market operators amid legal disputes.
- Federal regulators defend authority over event contracts against growing state challenges.
- Prediction market companies gain flexibility as compliance uncertainty continues affecting operations.
This week, regulatory relief for prediction market companies as Commodity Futures Trading Commission eases reporting requirements for event contracts. Several firms with activities in the growing field of prediction markets were immediately impacted by the move, such as Kalshi, Polymarket US, Gemini Titan, and Bitnomial.
In the CFTC announcement, the Division of Market Oversight and the Division of Clearing and Risk indicated that it would not recommend enforcement action against DIs that do not meet the swap reporting requirements if they do not satisfy those requirements. As a result, companies that listed approved event contracts have been given temporary flexibility withstanding wider legal issues across the country.
It was the agency’s contention that there was a need to provide more clarity on how event contracts should function under existing regulations, and that was the reason for the request of the exchanges and clearing organizations. While many event contracts fall under the legal definition of swaps, the CFTC admitted that they are very similar to futures contracts traded on regulated exchanges.
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Federal Agencies Defend Oversight of Prediction Markets
The latest ruling comes after prediction markets have been met with resistance from a number of state officials. A number of states have argued that sports-related event contracts are more akin to unlicensed sports betting products than federally-regulated derivatives instruments.
However, the CFTC continues defending its authority over these platforms. Earlier this week, the regulator challenged Ohio’s 2025 complaint against Kalshi and argued that the state exceeded its jurisdiction. The commission needs to have its jurisdiction over event contracts strengthened and the federal courts need to fix rulings that restrict it, said CFTC Chair Michael Selig.
Additionally, the regulator stated that event contracts have common attributes to traditional futures contracts. These contracts incorporate offset facilities, fungibility, exchange-based trading systems and standard terms. Therefore, the agency believes reporting requirements should resemble futures market standards instead of traditional swap regulations.
Currently, 19 beneficiaries are under the no-action position, and more companies could expect to benefit in the future. The move will not only minimize uncertainty over compliance, it also could bolster prediction market operators, as demand for such trading products keeps growing across the United States.
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