The staff of the Commodity Futures Trading Commission has granted no-action relief for fully collateralized event contracts.
Summary
The CFTC relaxed certain swap data reporting obligations tied to fully collateralized event contracts traded on regulated exchanges.
The relief applies to DCMs, DCOs, and market participants, while also simplifying the approval route for future applicants.
The decision comes as prediction market platforms continue battling state gambling regulators in courts across the U.S.
The guidance applies to specific swap data reporting and recordkeeping requirements connected to contracts listed by designated contract markets and cleared through derivatives clearing organizations.
Under the relief, CFTC staff said they would not recommend enforcement action against DCMs, DCOs, or market participants that fail to comply with selected swap reporting rules, provided they operate within the conditions outlined in the staff letter. The agency explained that the move follows multiple requests from companies involved in listing and clearing event contracts.
In addition, the updated letter introduces a more streamlined process for future applicants. Companies seeking to list or clear comparable contracts can request the same no-action treatment, with the CFTC able to include them in an appendix instead of issuing entirely new letters each time.
The staff also clarified that the relief extends to entities previously covered under earlier no-action letters. According to the agency, the framework is intended to provide consistent treatment for both existing and future participants while broader event contract reporting rules are still under consideration.
Prediction market regulation remains under dispute
The decision arrives as prediction markets continue facing legal pressure at the state level. Earlier reports from crypto.news noted that the CFTC supported Kalshi in an Ohio appeals case, arguing that state regulators had incorrectly categorized federally regulated event contracts as sports betting products.
The agency has also pushed back against actions taken in Arizona, Connecticut, Illinois, New York, and Wisconsin. In Arizona, federal court protection reinforced the argument that CFTC-regulated prediction markets fall under federal oversight while litigation proceeds.
Rapid market growth intensifies regulatory focus
The timing is significant as prediction markets continue expanding rapidly. Separate reports indicated that Kalshi achieved a $22 billion valuation following a $1 billion Series F funding round, while annualized trading volume reportedly climbed from $52 billion to $178 billion within six months.
Kalshi CEO Tarek Mansour stated that “event contracts could become a trillion-dollar market.” While that projection remains speculative, it highlights why regulators, exchanges, and state authorities are paying closer attention to oversight, reporting requirements, and legal definitions.
The CFTC’s latest action does not settle the broader debate surrounding event contracts. Instead, it focuses narrowly on reporting and recordkeeping standards for certain fully collateralized products. Even so, it offers DCMs, DCOs, and market participants a more standardized compliance framework as the agency continues developing broader regulations.
For crypto-related prediction markets, the guidance represents another sign of increasing federal involvement. Platforms including Kalshi, Polymarket, Coinbase, and Crypto.com remain central to the ongoing debate over whether these offerings should be treated as financial instruments, gambling products, or a combination of both under different legal systems.
