CFTC Issues New Guidance for Regulated Prediction Market Operators

Today, the Commodity Futures Trading Commission’s Division of Market Oversight issued a new prediction markets advisory regarding the listing for trading of event contracts.

What's the Scoop?

• Fresh Guidance: In an advisory issued today by the CFTC's Division of Market Oversight, agency staff reminded the prediction markets it supervises of their regulatory obligations under the Commodity Exchange Act. According to the bulletin, regulated prediction markets must take care in avoiding the listing of contracts that can be easily manipulated, such as sports-related event contracts that settle on athlete contest participation.
• Rules Needed: Speaking with CNBC, CFTC Chair Selig emphasized the need to establish clearer regulatory "rules of the road" as prediction markets gain increased traction among mainstream audiences. "It's really important that we don't have manipulation and insider trading and all sorts of abuse in our derivatives markets," Selig said.
• Seeking Comments: Tangentially, the CFTC also announced today that it is seeking public comment on the potential need to amend or issue new regulations concerning event contracts traded on prediction markets.