CFTC Grants Reporting Relief for Prediction Markets in No-Action Letter

The US Commodity Futures Trading Commission has effectively exempted prediction-market platforms from certain swap data reporting requirements.

The Block reported on May 13 that the CFTC’s Division of Market Oversight and Division of Clearing and Risk issued a no-action letter on May 12 easing swap data reporting and recordkeeping requirements for prediction markets. Under the letter, agency staff said they would not recommend enforcement action against designated contract markets, or DCMs, and derivatives clearing organizations, or DCOs, that list and clear event contracts for violations of swap data reporting and recordkeeping rules. A no-action letter is a form of informal regulatory guidance issued by the CFTC.

The move is aimed at reducing regulatory uncertainty surrounding prediction markets. Event contracts are settled based on the outcome of a specific event and can technically qualify as swaps. The CFTC said the step would streamline procedures for listing and clearing event contracts and ensure consistent treatment of market participants. Companies can report certain event contracts directly to the CFTC in a format similar to futures or options.

The letter names 19 firms, including Polymarket US, Kalshi, Gemini Titan and Bitnomial. The CFTC said other companies seeking to list event contracts may also ask to be covered by the relief.

A jurisdictional clash between federal and state authorities over prediction markets continues. Some states, including Ohio, view sports-related prediction markets as unlicensed sports betting. The CFTC, by contrast, maintains that the platforms fall under federal oversight as part of the derivatives market.