CFTC Receives Thousands Of Comments On Prediction Markets

The final days of the Commodity Futures Trading Commission’s comment period on prediction markets saw a rush of filings as industry groups, state regulators, academics, tribal gaming groups, politicians, and ordinary citizens raced to get their views on the record.

The final comment docket contains over 3,500 documents.

The CFTC, which regulates the derivatives markets, opened the comment window in March as part of an advanced notice of proposed rulemaking, asking whether it should amend or write new regulations for event contracts on prediction markets. Customers can buy and sell these contracts based on the outcomes of future events such as elections, sports, and entertainment events like the Oscars.

Whether the CFTC changes anything is still to be seen. Considering the multitude of lawsuits between states and prediction markets, it is likely the Supreme Court will have the final say in how prediction markets are regulated.

Proponents: prediction markets are derivatives

Industry stakeholders like prediction market companies Kalshi, along with Polymarket and Coinbase, argue that prediction markets are derivatives, not gambling, and that the CFTC should let them continue on regulated exchanges with surveillance, compliance, and clear limits on especially sensitive contracts.

Kalshi co-founder and COO Luana Lopes Lara submitted a detailed comment letter stating that the company wants to maintain federal oversight with clear guardrails and without broad state-by-state restrictions. She argued that the “CFTC’s oversight gives our participants confidence that our markets are fair, our contracts are enforceable, our surveillance is diligent, and funds are protected.”

She added that “the existing regulatory framework” is “well-designed and effective” and that “prediction markets should continue to be listed and overseen by the Commission, with firm limits on especially sensitive topics such as terrorism, assassination, war, and casino-style gaming, but without broad prohibitions that would push trading offshore.”

Currently, the CFTC treats event contracts offered by registered U.S. predictions platforms as derivatives and requires platforms offering them to register and follow agency rules. The agency argues that event contracts fall within its exclusive jurisdiction.

Opponents liken contracts to common betting products

Some critics, including many state regulators and industry groups, submitted comments saying event contracts are too much like mainstream betting products to be treated as financial instruments without adequate consumer protections. 

The American Gaming Association told the CFTC that it had “very strong concerns about the recent self-certification of what are essentially sports betting futures,” arguing that those products could “severely undermine state regulatory authority.”

A coalition of 40 states and the District of Columbia wrote to the CFTC that sports prediction markets are just sports betting by another name and should not be allowed to bypass state licensing, taxes, and integrity rules. The states said the platforms are offering sports wagering nationwide without proper oversight, and that the contracts threaten state tax revenue, undermine tribal gaming agreements, and let exchanges sidestep the protections applied to ordinary sports betting.

In their letter, the states wrote that the platforms are “circumventing state regulatory oversight to offer sports wagering nationwide.”

NBA, NCAA weigh in

NCAA President Charlie Baker also weighed in and was among the first to submit a comment and public statement. He urged the CFTC to suspend college sports prediction markets until a stronger regulatory framework is in place, warning that the products raise integrity, harassment, and student-athlete welfare concerns.

“Just as we need Congress to stabilize eligibility, we need federal regulators to stabilize these markets,” Baker said in a statement. “The answer cannot be the status quo. We need one set of fair, transparent standards.”

He called for mandatory monitoring of suspicious trading, geolocation records, cooperation with NCAA investigations, 21-and-over participation rules, restrictions on advertising and NIL promotions, and a ban on college player prop markets.

The NBA’s letter said that prediction markets tied to basketball create the same kind of integrity risks as sports betting and should be tightly regulated. The league said trading should be blocked for players, referees, and team staff. The league also wants prediction markets to verify who customers are, report suspicious trades, share trade data with leagues when asked, limit access to people under 21, use only official game data to settle bets, and ban or sharply limit risky markets such as player performance, officiating, injuries, discipline, and G League games.