U.S. CFTC's Behnam Says Agency Writing New Policy on Prediction Markets

• The chairman of the U.S. Commodity Futures Trading Commission told a crowd in Florida that his agency is coming up with a new rule for the prediction markets.
• The CFTC has been waging a legal battle with the platforms that allow users to buy simple contracts predicting the outcome of real events.

U.S. Commodity Futures Trading Commission Chairman Rostin Behnam said his agency will propose a rule in the coming months to establish new regulations for prediction markets.

"We anticipate considering a proposal to amend CFTC rules that address the treatment of certain types of event contracts, in order to provide additional regulatory clarity both for exchanges that seek to list event contracts, and for market participants," Behnam said Tuesday at a Futures Industry Association event in Florida.

This announcement comes after years in which the CFTC has tussled with the businesses trying to find a legal, regulated path for U.S. customers.

Read More: CFTC Denies Kalshi’s Plan to Let Users Bet on Control of U.S. Congress

Prediction platforms such as PredictIt, Polymarket, Zeitgeist and Kalshi give users a chance to buy contracts on the outcomes of real-world events, including election results and policy developments. The buyers make yes-or-no bets on those outcomes, paying off if they're right and losing the money if they're wrong.

The CFTC has routinely stymied these companies, for example arguing that contracts proposed by Kalshi amounted to unlawful gaming activity. But the industry pinned its hopes on courts eventually deciding otherwise.

Behnam's brief remarks revealed no details about the plan and what the agency intends to allow.

Also on Tuesday, he addressed the difficulties of the agency in handling crypto innovation. The commission members have struggled among themselves on the best way to address the push toward disintermediation first spurred by former FTX subsidiary LedgerX and its efforts to cut out the middleman in crypto derivatives.

"We must continually be fair and consistent in evaluating the products and proposals presented for our consideration," Behnam said."The commission must abide by core regulatory principles that prioritize, among other things, customer protections, market stability, and resilience. And, we must ensure a level playing field, regardless of the asset class."

UPDATE (March 12, 2024, 14:56 UTC): Adds reference to Kalshi contracts.