The acting chair of the CFTC has announced a break with past prediction markets policy ahead of a planned roundtable.
Acting Commodity Futures Trading Commission (CFTC) chair Caroline D. Pham blasted the body’s policies around prediction markets over the past few years.
As such, she announced a planned prediction markets roundtable that will seek input from a range of stakeholders to inform the US derivative regulator’s approach in this area, including sports-related event contracts.
The roundtable will follow a 45-day review into the sports-event contracts offered by several companies including Robinhood and Crypto.com.
Pham said: “Unfortunately, the undue delay and anti-innovation policies of the past several years have severely restricted the CFTC’s ability to pivot to common-sense regulation of prediction markets.
“Prediction markets are an important new frontier in harnessing the power of markets to assess sentiment to determine probabilities that can bring truth to the Information Age.
“The CFTC must break with its past hostility to innovation and take a forward-looking approach to the possibilities of the future.”
Pham added that, despite her frequent dissents since 2022, the Commission’s current interpretations of event contracts were a sinkhole of legal uncertainty and inappropriate constraint in the new administration.
CFTC’s new position a win for sports contracts
The announcement is a highly positive signal for the emerging sports-event contracts market, which has had its future clouded by regulatory uncertainties.
Kalshi, which partnered Robinhood for the offerings, announced the hire of Donald Trump Jr. as an advisor towards the end of last year.
Pham added: “This roundtable is a necessary first step in order to establish a holistic regulatory framework that will both foster thriving prediction markets and protect retail customers from binary options fraud such as deceptive and abusive marketing and sales practices.
“The CFTC appreciates the proactive engagement from market participants and looks forward to working together to support innovation while ensuring robust customer protection in our markets.”
Key obstacles identified by the CFTC as preventing “balanced” regulation include existing orders to designated contract markets, rule-making on event contracts, and previous federal court rulings.
The body highlighted other issues including the Commission’s own arguments in courts, previous investigations and enforcements, as well US sports betting laws, states rights and tribal sovereignty.