The Commodity Futures Trading Commission has relaxed reporting requirements for event contracts on platforms like Polymarket and Kalshi, giving the prediction market industry a clearer set of rules to follow. The change comes as federal regulators and state authorities continue to argue over who has the power to oversee these markets.
New reporting framework
The eased rules reduce the amount of information that exchanges must submit to the CFTC when they list event contracts. Event contracts are financial instruments that allow traders to bet on the outcome of a future event, such as an election or a weather pattern. The CFTC said the updated framework provides greater clarity for market participants, though it did not change the underlying legal status of such contracts.
Jurisdictional clash with states
Prediction markets have been a battleground between federal and state regulators. The CFTC argues that event contracts fall under its jurisdiction as derivatives, but some states consider them illegal gambling. Several states have taken enforcement actions against prediction market operators, creating uncertainty for platforms and users. The CFTC’s new rule is seen as an attempt to reassert federal authority and create a uniform national standard.
What the change means for operators
For companies like Polymarket and Kalshi, the rule offers a more predictable compliance environment. Both platforms have faced regulatory pressure in the past, and the new clarity could help them expand their offerings without fear of sudden enforcement. However, the rule does not resolve the fundamental question of whether event contracts are legal under state law. That question is likely to end up in court.
The CFTC’s action applies to all registered entities that trade event contracts. The agency has not said whether it plans further rulemaking on the topic. State regulators have not yet commented on the change, leaving the long-running dispute over jurisdiction unresolved.
