The CFTC granted prediction market platforms relief from swap reporting rules amid growing regulatory disputes.
The Commodity Futures Trading Commission's staff issued a no-action letter on Wednesday, relieving prediction market platforms from swap data reporting and recordkeeping requirements. The relief covers designated contract markets (DCMs) and clearinghouses that list and clear event contracts.
The CFTC's Division of Market Oversight and Division of Clearing and Risk said they will not recommend enforcement action against DCMs and clearinghouses for failing to comply with those reporting obligations. The agency said the letter was published in response to numerous requests from platforms seeking clarity on their regulatory status.
Event contracts technically qualify as "swaps" under existing rules because they are based on binary outcomes. However, the CFTC noted that such contracts share characteristics with futures and options, including standardized terms, exchange-trading protocols, fungibility, and offset, making swap-style reporting requirements an awkward fit.
The no-action letter allows firms to report event contracts directly to the Commission in a format similar to that used for futures and options. The CFTC said the position was intended to streamline the process for addressing such requests and ensure uniform treatment across market participants.
The letter currently lists 19 beneficiaries, including Polymarket US, Kalshi, Gemini Titan, and Bitnomial. Entities wishing to list event contracts may also request inclusion under the no-action position.
The relief arrives amid an ongoing jurisdictional dispute between federal and state authorities over #prediction markets. Several states have argued that event contracts tied to sports outcomes amount to unlicensed sports betting, while the CFTC maintains these platforms operate as federally regulated derivatives markets.
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