The Coalition for Prediction Markets has backed the Commodity Futures Trading Commission’s proposed rules for prediction markets but urged the agency to revise parts of the framework, including the definition of “gaming” and how certain event contracts are reviewed.
In a July 27 comment letter submitted to CFTC Secretary Christopher Kirkpatrick, the coalition said the proposed rulemaking could help establish a federal framework for prediction markets while maintaining the agency’s existing principles-based regulatory approach.
The comments were submitted in response to the CFTC’s Notice of Proposed Rulemaking on “Prediction Markets; Public Interest Determinations” (RIN 3038-AF65).
Why coalition wants a single federal framework
The coalition said prediction markets and event contracts listed on federally regulated exchanges fall under the CFTC’s exclusive jurisdiction under the Commodity Exchange Act (CEA). It argued that a consistent federal approach is necessary to avoid fragmented oversight across different states and maintain uniform rules for federally registered markets.
The group supported the CFTC’s position that event contracts should not face automatic bans under existing rules. Instead, contracts should undergo individual public interest reviews before the agency determines whether they can be listed.
According to the coalition, this contract-by-contract approach is consistent with the CEA and avoids treating entire categories of prediction markets as automatically prohibited.
Coinbase calls for separate reviews under CFTC framework
Coinbase has also urged the CFTC to create a clearer review process for prediction market contracts, arguing that separating key regulatory questions would provide greater certainty for market participants.
In its response to the same CFTC proposal, the exchange recommended that regulators first determine whether an event contract falls under one of the “enumerated activities” listed in the Commodity Exchange Act (CEA), and then separately assess whether the contract is contrary to the public interest.
Coinbase said separating the two reviews would avoid unnecessary legal uncertainty and better align with the structure of the CEA while allowing the CFTC to maintain oversight of prediction markets.
Why changes matter for prediction market regulation
The CFTC’s proposed framework could shape how prediction markets handle contracts tied to elections, economic events, and other real-world outcomes. The coalition said clearer standards would provide more certainty for exchanges and participants while allowing regulators to address contracts that raise specific public interest concerns.
The group argued that overly broad restrictions could limit the ability of prediction markets to provide price discovery and information aggregation functions.
A key dispute over prediction market rules
While supporting the CFTC’s effort to define “gaming” under the proposed rules, the coalition said the current language could capture activities beyond traditional gambling. The proposal defines gaming as activities involving recreation or entertainment, rules, and outcomes influenced by luck, skill, or athletic ability.
The coalition warned that this definition could potentially include activities such as contests, awards programs, or other events that are not traditionally viewed as gambling. It recommended that the CFTC either adopt a narrower definition focused on activities traditionally understood as games or provide additional guidance on how regulators would apply the standard.
Why coalition opposes additional restrictions
The coalition also argued that prediction markets operating as CFTC-registered entities already have compliance obligations designed to protect market integrity. It pointed to existing requirements for designated contract markets, swap execution facilities, and futures commission merchants, including market surveillance, customer protections, anti-fraud measures, and anti-manipulation rules.
The group said these existing regulatory tools should remain central to oversight rather than introducing broader restrictions specific to prediction markets.
The road ahead for U.S. prediction markets
The Coalition for Prediction Markets concluded that the CFTC’s proposal represents progress toward a federal framework but said additional clarity is needed before final rules are adopted. The group encouraged the agency to maintain federal oversight, preserve contract-specific reviews, and refine definitions that could affect which prediction market contracts are allowed.
The CFTC is expected to review submitted comments before determining the final structure of its prediction market rules.
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