CFTC no-action letter eases event contract reporting rules

The US Commodity Futures Trading Commission’s (CFTC) market and clearing divisions issued no-action relief for fully collateralized event contracts, easing certain swap data reporting and recordkeeping obligations for prediction market operators and clearing organizations.

The divisions said Wednesday that they will not recommend enforcement against designated contract markets (DCMs), derivatives clearing organizations (DCOs), or their participants for failing to comply with specified swap-related recordkeeping requirements or for failing to report covered transactions to swap data repositories.

Event contracts on prediction markets technically qualify as “swaps” as they are based on binary events. However, the letter argued that similar contracts are listed for trade by DCMs and have more similar characteristics to futures and options on futures, hence enabling firms to report certain events contracts directly to the CFTC.

The letter listed 19 platforms, including Polymaket, Kalshi and Gemini Titan. It added that companies seeking to list similar contracts may request a no-action letter from the CFTC.

The CFTC said the no-action letter comes in response to numerous requests from DCMs and DCOs that list and clear event contracts and said it anticipates more similar requests.

The move could reduce compliance complexity for CFTC-regulated prediction market venues, including Kalshi and Polymarket US as the agency continues to defend its jurisdiction against state gambling regulators.

The no-action letter comes as prediction markets sit at the center of a widening federal-state fight over whether sports and other event contracts should be regulated as derivatives by the CFTC or as gambling products by state authorities. The agency filed an amicus brief in the Sixth Circuit Court of Appeals on Tuesday, arguing that Ohio’s actions intrude on federally regulated markets after it ordered Kalshi to halt sports event contracts in the state last year.

Kalshi sued Ohio lawmakers in October 2025, requesting that the federal court stop the Ohio Casino Control Commission and state attorney general from taking action, but the motion was denied in court in March, leading Kalshi to appeal the decision. 

CFTC no-action letter on prediction markets. Source: CFTC.gov

CFTC pushes for exclusive jurisdiction over prediction markets

The CFTC has multiple ongoing disputes with state lawmakers over prediction market jurisdiction. It sued five states in a bid to cement its authority over prediction markets, including lawmakers in Wisconsin, New York, Arizona, Connecticut and Illinois. 

Earlier in May, the CFTC said it received over 1,500 responses on a rule it proposed in March that would allow it to amend or issue new regulations for event contracts on prediction markets. 

The responses were mixed, with some state regulators calling for a stricter crackdown on prediction markets, while others, such as venture capital firm a16z, sided with the CFTC, arguing that state crackdowns on these platforms conflict with federal law and damage market access for ordinary users.

Related: Kalshi, Polymarket face trading halt in Nevada after court rulings 

On March 12, the CFTC issued a staff advisory classifying event contracts on prediction markets as a “financial asset class,” Cointelegraph reported. 

Earlier in February, CFTC Chair Michael Selig publicly reiterated claims that the CFTC had “exclusive jurisdiction” over prediction markets. 

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