CFTC warns prediction markets against template contract certifications
In brief
- CFTC issued advisory Friday against template-style contract certifications by prediction markets
- Generic filings undermine regulator's ability to evaluate settlement methodology and compliance
- Second warning in months signals firms submitting overly generalized submissions
Self-Certification Gone Soft
Many designated contract markets regulated by the CFTC continue to self-certify event contracts as broad templates without supplying the terms and conditions of each proposed permutation. The agency said that broad, template-style certifications should not be submitted, a message it's now had to repeat.
The CFTC regulates prediction market firms including Kalshi, Coinbase, Polymarket, and Crypto.com. As the explosive growth of the event-contracts market has accelerated—especially in sports betting and political outcome prediction—so too have shortcuts in the filing process.
Why It Matters
The regulator said skirting the process can undermine its ability to work out whether the firm has supplied all information and has adequately evaluated settlement methodology and compliance. Proper certification isn't bureaucratic box-checking; it's the foundation for consumer protection and market integrity.
The CFTC did clarify one point: closely related event contracts may be certified as a class, citing legitimate ways to make consolidated filings with shared exhibits. The distinction matters. Grouping similar contracts is permissible. Blanket templates are not.
Jurisdictional Fog
The CFTC's status as the primary regulator of prediction markets is itself still facing some legal ambiguity that courts are expected to resolve, potentially the U.S. Supreme Court. Meanwhile, a large number of states have pursued the businesses on accusations of illegal sports gambling that should be overseen by the states themselves. The regulator's chairman, Mike Selig, has made it an agency priority to fight in state and federal courts to insist the CFTC is in sole charge of overseeing event contract platforms.
On Friday, the CFTC also issued a notice to extend the regulatory status of Kraken's Derivatives Exchange, which had been under a dormant designation. The last trade was executed on that exchange in early 2025. Kraken said it needed more time to evaluate its next steps after acquiring Bitnomial earlier this year.
