The Commodity Futures Trading Commission issued an advisory reminding businesses in prediction markets not to cut corners by submitting broad, template-style certifications for event contracts. The advisory was the regulator’s second such warning in recent months, and it appears amid explosive growth in the event-contracts market; the last trade on Kraken Derivatives Exchange was in early 2025, and Kraken acquired Bitnomial earlier this year.
The advisory said many designated contract markets continue to self-certify event contracts as broad templates without supplying the terms and conditions of each proposed permutation. It stated that those broad templates lack the terms and conditions and the concise explanation and analysis required with respect to product terms, the underlying commodity, and the product’s compliance. The CFTC warned that skirting the certification process can undermine its ability to evaluate the information and analysis necessary to assess settlement methodology, data sources, and core-principles compliance. The agency also noted that closely related event contracts may be certified as a class with consolidated filings, which can affect how permutations are reviewed.
This advisory is the second recent regulatory notice addressing overly generalized contract submissions in prediction markets. Regulatory scrutiny of event-contract certifications has therefore increased at both federal and state levels.
The CFTC said many designated contract markets continue to self-certify event contracts as broad, template-style certifications that do not supply the terms and conditions of each proposed permutation. The advisory noted that closely related event contracts may be certified as a class with consolidated filings. The agency described broad template-style certifications as submissions that lack the individualized terms and conditions required for each permutation.
The advisory stated that these broad templates lack the terms and conditions and the concise explanation and analysis required with respect to the product’s terms and conditions, the underlying commodity, and the product’s compliance. The advisory said templates often omit the information, explanation, and analysis needed to show that a product has supplied all required information and analysis. The CFTC also identified that missing analyses include review of settlement methodology, data sources, and core-principles compliance.
The CFTC warned that skirting the certification process can undermine the agency’s ability to evaluate the required information and analysis and to adequately evaluate settlement methodology, data sources, and core-principles compliance of all permutations of the contract. That undermining, the advisory said, affects the regulator’s ability to oversee event-contract offerings.
The event-contracts market has experienced explosive growth in recent months, with notable increases in platforms offering sports bets and predictions of political outcomes. The advisory referenced this expansion of event contracts as a market trend, highlighting sports betting and political-outcome prediction markets as prominent areas of growth. Several industry participants have expanded offerings to include a wide range of event-based contracts across these categories.
There is legal ambiguity about whether the Commodity Futures Trading Commission is the primary regulator of these markets, and courts are expected to decide that question, potentially reaching the Supreme Court. The CFTC’s chairman, Mike Selig, has prioritized the agency’s claim of sole regulatory oversight over event-contract platforms. At the same time, a large number of states have pursued these businesses on accusations that event-based sports betting constitutes illegal sports gambling within state jurisdiction.
Regulatory conflict between federal and state authorities exists as courts consider who has primary oversight. The CFTC’s asserted claim to sole supervision and widespread state enforcement actions frame the current legal dispute.
The CFTC reiterated that submitting broad, template-style certifications for event contracts in prediction markets fails to supply individualized terms and conditions and omits the concise explanation and analysis required regarding product terms, the underlying commodity, and compliance. The advisory warned that such shortcuts undermine the agency’s ability to evaluate settlement methodologies, data sources, and core-principles compliance for all permutations of event contracts. That regulatory caution occurs against a backdrop of legal disputes over whether the CFTC or state authorities have primary oversight of event-contract platforms.
