CFTC Issues No-Action Letter on Prediction Markets

TLDR

• The CFTC issued a blanket no-action letter relieving swap data reporting duties for certain event contract platforms.
• Regulators stated they will not recommend enforcement actions against designated contract markets and clearinghouses covered by the letter.
• Officials said the relief responds to multiple requests from platforms listing and clearing event contracts.
• The agency confirmed that 19 entities, including Polymarket US and Kalshi, can rely on the no-action position.
• Federal authorities continue to challenge Ohio’s complaint against Kalshi in an ongoing jurisdiction dispute.

The Commodity Futures Trading Commission (CFTC) has granted temporary relief to certain event contract platforms. The agency issued a blanket no-action letter that addresses swap data reporting and recordkeeping duties. The action targets designated contract markets and clearinghouses that list and clear event contracts.

CFTC Clarifies Reporting Relief for Prediction Markets

The CFTC’s Division of Market Oversight and Division of Clearing and Risk released the letter on Wednesday. The divisions stated they will not recommend enforcement actions for failing to meet specific swap reporting rules. They said the relief applies to designated contract markets and derivatives clearing organizations that handle event contracts.

The announcement stated that the divisions acted after receiving multiple requests from platforms. “This position is in response to numerous requests from DCMs and DCOs that list and clear event contracts,” the agency said. The divisions added that they intend to streamline the process and ensure uniform treatment for market participants.

The letter addresses event contracts that rely on binary outcomes tied to real-world events. Such contracts may meet the legal definition of swaps under federal law. However, the agency noted that exchanges list them as futures-style products rather than traditional swaps.

The CFTC explained that these contracts share features with futures and options on futures. They use standardized terms, exchange-trading protocols, and allow offsetting positions. Therefore, the letter allows firms to report certain event contracts directly to the Commission in a futures-style format.

The letter currently names 19 beneficiaries who may rely on the relief. These entities include Polymarket US, Kalshi, Gemini Titan, and Bitnomial. The CFTC stated that other entities may request similar no-action treatment if they plan to list event contracts.

Federal-State Dispute Over Prediction Markets Intensifies

The growth of prediction markets has triggered disputes between federal and state authorities. Several states argue that sports-based event contracts amount to unlicensed sports betting. In contrast, the CFTC maintains that these products fall under its federal derivatives oversight.

Earlier this week, the CFTC challenged Ohio’s 2025 complaint against Kalshi. The agency argued that the state exceeded its jurisdiction over event contracts. The dispute centers on whether state gambling laws apply to federally regulated derivatives markets.

CFTC Chair Michael Selig addressed the matter in a public statement on Tuesday.

Selig also emphasized the Commission’s position on federal authority.

The no-action letter aims to reduce regulatory uncertainty for platforms that offer event contracts. The Commission stated that entities seeking to list such contracts may formally request similar relief. The CFTC continues to defend its jurisdiction in the Ohio appeal, according to Selig’s latest statement.

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