CFTC issues first guidance on prediction markets, asking exchanges to consult regulators before listing event contracts to prevent manipulation, insider trading, and illegal betting risks.
The Commodity Futures Trading Commission released new guidance for prediction markets in the United States. The agency asked exchanges to have discussions with regulators before listing certain event contracts. Some markets may run the risk of being manipulated or subject to insider trading, officials said.
CFTC Asks Exchanges to Review Risks Before Listing Event Contracts
The new document implores exchanges to collaborate closely with regulators in launching new markets. Officials said contracts associated with events may pose special risks to investors. Therefore, the role of platforms should be to study if the contracts could enable unfair trading.
The Commodity Futures Trading Commission issued new guidance for prediction markets, asking exchanges to engage with regulators before opening certain markets that might be vulnerable to manipulation and insider trading. https://t.co/TUVZwoiOnc
— Bloomberg (@business) March 12, 2026
The guidance explained that prediction markets can continue to use the self-certification process. This process enables exchanges to list contracts without having to be fully approved every time. However, the CFTC said companies will have to check carefully for potential problems.
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Sports-related markets were given special attention in the guidance. The CFTC encouraged exchanges to cooperate with sporting leagues and event organizers. This cooperation may help to detect insider information or suspicious betting activity.
The agency also said the possibility of blocking some types of contracts completely. Markets associated with terrorism, war or assassination may be against the public interest. Due to this rule, the CFTC retains the right to prevent certain products.
Rulemaking Process Begins as Prediction Markets Grow Fast
The CFTC also began the formal rulemaking process using the new guidance. The agency requested comments from the public for 45 days. This review time will help determine how prediction markets should function in the future.
Prediction markets gained popularity following the United States elections of 2024. Many traders used these platforms to forecast political results as they happened. In some cases, the market prices were closer to the final result than opinion polls.
Previous bills in 2024 sought to prohibit certain forms of event betting altogether. The new guidance supersedes such earlier plans with a more flexible approach. Instead of banning all markets, the CFTC wants increased supervision.
The agency also reminded exchanges of their responsibility to be on the lookout for fraud. Platforms must maintain records, monitor trades and prevent illegal activity. Designated Contract Markets are required to keep audit trails of each contract.
Federal and State Regulators Continue Dispute Over Control
The advice comes amid a dispute between federal and state regulators. Some states think that prediction markets are like gambling. Because of this view, state gaming agencies want authority of the platforms. However, the CFTC said these contracts are financial derivatives under federal law.
Chair Rostin Behnam stated that the agency does not want to see conflicts between regulators. He explained that clear rules will help exchanges to understand their duties. Without clear guidance, companies could get into trouble in various states.
Officials also asked the public commenters to comment on difficult questions regarding contracts for the event. For instance, regulators want to know how to define terrorism or war in markets. They also inquired how the insider information of the government workers might influence prices.
The new guidance demonstrates that prediction markets are becoming an important part of finance. Regulators are now interested in helping growth while preventing illegal activity. If new rules get approved, exchanges may continue to grow with enhanced oversight.
