Key Takeaways
- Prediction market operators have received their second regulatory warning in 2025 regarding inadequate contract certification practices.
- Platforms including Kalshi, Coinbase, Polymarket, and Crypto.com fall under CFTC regulatory jurisdiction.
- Companies are using generic template submissions rather than filing comprehensive individual contract details.
- Questions remain about the CFTC’s authority as the primary prediction market regulator amid ongoing litigation.
- Kraken’s Derivatives Exchange received approval to extend its inactive regulatory designation.
The Commodity Futures Trading Commission has doubled down on compliance expectations for prediction market operators, issuing its second advisory this year demanding more thorough contract certification submissions.
In Friday’s announcement, the regulator highlighted that CFTC-overseen companies have been filing blanket template certifications for event contracts rather than submitting the necessary specifics for each distinct agreement.
Regulatory Expectations Clarified
According to the agency, platforms must include comprehensive terms and conditions for every proposed contract variant, accompanied by thorough explanations covering the product structure, underlying assets, and regulatory compliance justifications.
“Broad, template-style certifications should not be submitted,” the CFTC emphasized in its public statement.
The regulator’s primary worry is that insufficient documentation prevents effective oversight, making it difficult to verify whether operators have properly assessed settlement mechanisms, information sources, and adherence to regulations across different contract categories.
The agency acknowledged that similar contracts may be bundled within one submission provided they maintain substantially identical terms and include adequate supporting materials.
This guidance arrives just ahead of Monday’s public comment deadline concerning proposed modifications to the CFTC’s framework for evaluating whether specific event contracts serve the public interest.
Industry Platforms Under Scrutiny
Multiple prominent prediction market operators operate under CFTC supervision, including Kalshi, Coinbase, Polymarket, and Crypto.com.
The advisory targets all “designated contract markets” — the official designation for regulated exchanges — that have been streamlining the certification procedure inappropriately.
This marks the second instance the regulator has addressed this concern, following an initial warning issued March 12 of this year.
The explosive expansion of event contracts, particularly surrounding athletic events and electoral outcomes, has strained existing regulatory frameworks. As a developing sector, both operators and regulators continue refining operational standards.
Complicating matters further, the CFTC’s jurisdiction over prediction markets remains legally contested. Ongoing court proceedings may ultimately require Supreme Court intervention for final resolution.
Numerous state governments have challenged prediction market platforms, arguing their sports-related contracts constitute unlawful gambling under state statutes, directly contradicting the CFTC’s assertion of exclusive federal regulatory authority.
Chairman Mike Selig has prioritized protecting the agency’s jurisdictional claims, vigorously contesting legal challenges across both state and federal courts.
Friday also brought separate CFTC action granting Kraken’s Derivatives Exchange an extension of its inactive regulatory designation. The extension maintains Kraken’s compliance standing while management evaluates future operations following its Bitnomial acquisition completed earlier in 2025.
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