The Commodity Futures Trading Commission (CFTC) has temporarily relaxed swap data reporting and recordkeeping requirements for a group of federally supervised prediction market platforms, reducing compliance obligations for event contract trading.
In a no-action letter issued this week, the agency said designated contract markets and derivatives clearing organizations that list eligible event contracts will not face enforcement for failing to submit full swap-style reports, provided they follow the new framework.
Move targets swap-style reporting for event contracts
The CFTC’s Division of Market Oversight and Division of Clearing and Risk said the action responds to multiple requests from approved trading venues and clearinghouses and is intended to:
- align the treatment of event-based contracts across platforms
- streamline the approval process for firms listing these products
- reduce uncertainty over whether such products should be treated as swaps or as futures-style contracts
Although event contracts are technically defined as swaps under current rules, the CFTC said they more closely resemble listed futures and options on futures because of their standardized terms and exchange-style trading.
New reporting format mirrors futures
Under the no-action framework, firms can submit data on event contracts using a standardized format similar to that used for futures reporting, rather than the more complex swap reporting regime.
The CFTC identified 19 platforms and clearing organizations eligible at the outset, including:
- Polymarket US
- Kalshi
- Gemini Titan
- Bitnomial
The commission said additional venues may apply for the same treatment, signaling an avenue for other platforms to benefit from the simplified requirements.
Regulatory relief amid jurisdictional disputes
The move comes as prediction markets sit at the center of a broader dispute between federal and state authorities.
Several U.S. states argue that event contracts, particularly those tied to sports or other real-world outcomes, are a form of unlicensed betting under state gambling laws. The CFTC maintains that these products fall under its jurisdiction as derivatives under federal law.
Earlier this week, the agency filed an appeal in an Ohio case, arguing the state overstepped its authority in attempting to block a federally supervised platform’s event market. CFTC Chair Selig said the commission is committed to defending its regulatory role over these products.
Compliance burden eased for federally supervised platforms
By allowing futures-style reporting for event contracts, the CFTC is:
- reducing immediate reporting and recordkeeping burdens
- helping designated markets avoid more complex, swap-level compliance systems
- freeing operational and technology resources that might otherwise go to detailed swap reporting
The shift also acknowledges the specific structure of binary event contracts and brings their oversight closer to that of traditional futures markets.
Rapid sector growth underpins policy change
The no-action relief comes as event-based markets expand rapidly:
- total notional trading volume in the sector reached more than $44 billion in 2025
- monthly transaction volume rose from about $1.2 billion in early 2025 to more than $20 billion by January 2026
- unique active wallets climbed above 800,000 per month
- in April 2026 alone, sector volume was approximately $29.8 billion
The CFTC’s clearer compliance pathway could encourage additional firms to develop and list event contracts, potentially widening the range of markets available and increasing competition among platforms.
State–federal clash remains unresolved
Despite the federal relief, major legal and regulatory uncertainties remain.
Several states, including Ohio, New York, and Wisconsin, continue to contend that many event contracts—especially those tied to sports outcomes—are gambling products that require state-level licensing or prohibition. That stance conflicts directly with the CFTC’s claim of primary authority over these products.
The commission recently filed an amicus brief in the U.S. Court of Appeals for the Sixth Circuit in support of Kalshi in its dispute with Ohio regulators. Chair Selig has characterized such state actions as “encroachment” on federal authority.
Ongoing litigation keeps risk elevated for platforms
Multiple active cases mean platforms still face:
- a patchwork of state regulations
- the possibility of state enforcement actions even when operating under CFTC oversight
- uncertainty over the long-term classification and legality of certain event markets
While the CFTC’s no-action letter offers near-term operational relief and regulatory clarity at the federal level, it does not settle the underlying jurisdictional battle that will shape how prediction markets and event contracts evolve in the United States.
To see how traders are already using event-based markets, explore Toobit’s event contracts guide for practical, real-world examples.
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