The U.S. Commodity Futures Trading Commission (CFTC) has published a proposed regulatory framework for prediction markets and event contracts, offering greater clarity on the types of contracts that may be listed on regulated U.S. exchanges.
The proposal seeks to distinguish contracts linked to gaming-related activities from those based on real-world events, such as elections, awards and financial benchmarks. Notably, the CFTC proposes that event contracts should only be prohibited where their settlement is directly contingent on participation in the underlying activity. Rather than imposing a blanket prohibition, the regulator would assess such contracts against a public interest standard.
The consultation is open for public comment for 45 days, with any final rules expected to take effect 60 days following adoption. If implemented, the framework could have significant implications for exchanges, market operators, fintech firms and investors active in U.S. event contract markets, while also providing greater regulatory certainty for market participants.
Our regulatory team advises clients across the UK and internationally on developments in financial services and derivatives, and digital asset regulation. If your business is considering the potential impact of these proposals, we would be pleased to discuss the legal and regulatory implications, compliance considerations and available business planning options.
