CFTC’s Upcoming Roundtable on Prediction Markets Sparks Industry-Wide Debate

The Commodity Futures Trading Commission (CFTC) will soon host its April 30 roundtable, an event that could shape the future of US prediction markets. With sports-based contracts facing rising regulatory scrutiny, the upcoming session is already generating heated debates across the gaming and financial sectors. Meanwhile, leading prediction platforms continue offering their services across several states.

Prediction Platforms Continue Expanding Their Offerings

The highly anticipated roundtable follows the CFTC’s February request for public input on whether prediction markets offering contracts on sports event outcomes should be subject to federal derivatives regulation or state-controlled gambling regulations. The agency has published 29 submissions from gambling industry stakeholders and other interested parties, showcasing the growing tensions.

The heart of the debate revolves around whether platforms like PredictIt, Kalshi, and BetEx are high-tech sportsbooks or legitimate financial marketplaces. Such providers allow users to buy and sell contracts on outcomes like game winners, player stats, or season-long performances. Although they share a similar design with financial derivatives, critics argue they operate like unlicensed sports betting operators.

Although prediction markets have existed for years, rising scrutiny has thrust them into the limelight. In October 2024, Kalshi won a milestone court case, allowing it to offer election contracts despite CFTC objections. This ruling opened the floodgates to broader offerings, including sports markets, encouraging other platforms like Robinhood and Crypto.com to show interest in this vertical.

Gambling Industry Stakeholders Voiced Their Concerns

The most vocal opposition against prediction markets comes from states with established sports wagering markets, like Nevada, New Jersey, and Tennessee. State officials and industry representatives argue that federally regulated prediction markets undercut years of legislative work, investment, and consumer protection frameworks, as such platforms do not answer to local regulators.

We are deeply concerned about the availability of sports events contracts, the economic impact it will have on New Jersey, and the consumer harm that may come to our citizens due to the lack of protections.

The Casino Association of New Jersey

Tribal representatives are also apprehensive, worrying that prediction markets could undermine tribal sovereignty and exclusivity compacts, potentially leading to complex legal battles between states, tribes, and federal agencies. The leading question revolves around who must regulate prediction platforms and how they fit within the broader gambling ecosystem.

The CFTC’s roundtable will include regulators, academics, industry stakeholders, and consumer protection advocates who will provide valuable insights. Discussions will likely revolve around whether sports outcome contracts constitute derivatives, their co-existence alongside state-regulated sportsbooks, consumer protections, and the potential economic impact on state tax revenues and tribal gaming compacts.