CFTC releases guidelines, proposes official rules for prediction markets

The U.S. Commodity Futures Trading Commission (CFTC) has announced guidelines for prediction markets and proposed a new set of official rules. According to CoinDesk, the CFTC described prediction market operators as "proven sources that provide reliable information to news outlets, sports leagues, financial institutions, and ordinary Americans." The recommendations include methods by which Designated Contract Markets (DCMs) such as Kalshi, Coinbase, and Polymarket have received approval for their trading products from the regulator. The document specifies that these firms must only handle trading contracts that are not easily susceptible to manipulation. CFTC Chairman Michael Selig explained that the move marks the start of a new rulemaking process based on a reasonable and consistent interpretation of the Commodity Exchange Act. He added that it would also assure Americans that the CFTC will exercise exclusive jurisdiction over prediction markets. However, the implementation of the rules is expected to take several months. The CFTC is currently gathering public feedback on the proposed direction.