The CFTC has published guidance on the operation of prediction markets and suggested that exchanges discuss new contracts with regulators as early as the development stage. The document is one of the first official responses from a federal regulator to the rapid growth of these markets in recent years.
Exchanges will still be able to use the self-certification procedure to launch new contracts. However, the CFTC recommends evaluating whether certain categories of events pose a higher risk of manipulation or price distortion and consulting with specialists at the early stages of contract design.
At the same time, the agency released an advance notice of proposed rulemaking that raises dozens of questions about possible changes to existing regulations.
Although there is no direct ban at this stage, the CFTC document notes the possibility of blocking contracts related to murders, wars, or terrorism if the agency determines that they conflict with the public interest.
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