TLDR
- The CFTC sent prediction market operators a new advisory on self-certification rules for event contracts.
- The agency says some operators use one template across multiple contracts with different data sources.
- A House Agriculture Subcommittee hearing last week focused on prediction market oversight.
- The CLARITY Act, a crypto market structure bill, could help the CFTC hire more staff.
- Kalshi odds show a 68% chance the Senate votes on the bill before its August recess.
The Commodity Futures Trading Commission sent prediction market operators a new advisory late Friday. It reminds them of the steps they must follow when self-certifying new event contracts.
The six-page memo came from Duncan Hennes, the acting director of the CFTC’s Division of Market Oversight. Staff there noticed operators submitting one template to cover several markets that use different sources for grading results.
The memo said this practice makes it harder for the division to check if all information is included. It also said the practice blocks the public from reviewing that information.
This follows an earlier advisory from March. That memo told operators to follow the nearly two dozen core principles in the Commodity Exchange Act.
House Hearing Raises Concerns
The topic came up during a House Agriculture Subcommittee hearing last Tuesday. Lawmakers and industry voices debated how prediction markets should be regulated.
Chris Cylke of the American Gaming Association asked Congress to stop federally regulated prediction markets from self-certifying sports and casino-style contracts. He said these markets do not follow the same rules as state-licensed sportsbooks.
Carl Kennedy of Katten Muchin Rosenman LLP disagreed. He said the CFTC can review any contract within 10 days and take it down if it fails a public interest test.
Kennedy compared it to how gold is traded through different regulators. He said sports contracts can work the same way.
Rep. Nikki Budzinski asked whether self-certification gives the CFTC enough detail, especially for contracts tied to a single player. Robert Schwartz, a former CFTC general counsel, said the commission’s proposed rules already address this. He said single-actor contracts are unlikely to meet the public interest standard.
Crypto Bill Could Aid CFTC Staffing
Lawmakers also discussed the CLARITY Act during the hearing. This crypto market structure bill includes language that could help the CFTC hire more staff.
Schwartz said the agency was understaffed when he worked there between 2011 and 2025. Its workforce has dropped 20% since then.
He said the CFTC has managed to adapt with fewer resources. He added that the agency still needs more funding and staff than it currently has.
David Bean of the Indian Gaming Association pushed back on the bill. He said it could let prediction markets expand further into gaming.
Kalshi odds on Monday night showed a 68% chance the Senate votes on the bill before its August 7 recess. The same trading data showed a 44% chance a separate crypto market structure bill becomes law by December 1, and a 52% chance by July 2027.
