TLDR The CFTC sent prediction market operators a new advisory on self-certification rules for event contracts. The agency says some operators use one template across multiple contracts with different data sources. A House Agriculture Subcommittee hearing last week focused on prediction market oversight. The CLARITY Act, a crypto market structure bill, could help the CFTC hire more staff. Kalshi odds show a 68% chance the Senate votes on the bill before its August recess.
The Commodity Futures Trading Commission sent prediction market operators a new advisory late Friday. It reminds them of the steps they must follow when self-certifying new event contracts.
The six-page memo came from Duncan Hennes, the acting director of the CFTC’s Division of Market Oversight. Staff there noticed operators submitting one template to cover several markets that use different sources for grading results.
The memo said this practice makes it harder for the division to check if all information is included. It also said the practice blocks the public from reviewing that information.
This follows an earlier advisory from March. That memo told operators to follow the nearly two dozen core principles in the Commodity Exchange Act.
House Hearing Raises Concerns
The topic came up during a House Agriculture Subcommittee hearing last Tuesday. Lawmakers and industry voices debated how prediction markets should be regulated.
Chris Cylke of the American Gaming Association asked Congress to stop federally regulated prediction markets from self-certifying sports and casino-style contracts. He said these markets do not follow the same rules as state-licensed sportsbooks.
Carl Kennedy of Katten Muchin Rosenman LLP disagreed. He said the CFTC can review any contract within 10 days and take it down if it fails a public interest test.
Kennedy compared it to how gold is traded through different regulators. He said sports contracts