SEC Hints at Wider Examination of Growing Prediction Markets

US federal watchdogs are paying more attention to the expanding prediction markets industry, as Securities and Exchange Commission (SEC) head Paul Atkins suggests that his agency might have authority over some parts of the sector.

Atkins Says Some Prediction Contracts May Fall Under SEC Rules

While speaking to the Senate Banking Committee, Atkins hinted that the legal standing of many contracts on prediction platforms depends on how companies set up these products. He pointed out that instruments that look like traditional investments might already fall under current securities laws, suggesting the regulator would not need new laws to step in.

So far, the Commodity Futures Trading Commission (CFTC) has watched over prediction platforms. Atkins said the CFTC would stay in charge of most of the field, but he emphasized that both agencies need to work together to prevent gaps or different interpretations.

These comments come as prediction markets grow at an incredible rate. Industry figures show trading volumes have grown several times in the last year, pushing the sector’s activity up to tens of billions of dollars. Top platforms like Kalshi and Polymarket have caught the eye of many investors and built large user bases during big political and economic events.

These platforms give users the chance to bet on how likely different things will happen – from who will win elections to what economic numbers will show, what companies will announce, and where stock prices will go. People in charge of making rules are worried that some of these bets are hard to tell apart from financial trades, gambling, or investments, which makes it tricky to keep an eye on them.

Washington Signals Tougher Rules as Prediction Markets Expand

Atkins said that bets linked straight to stocks or market measures – like ones that follow how well a stock does or how the whole market performs – might need the SEC to step in. However, bets on sports games or similar events will stay under commodity rules or even be handled by state gambling laws.

The fight over regulations is heating up as several US states take certain event-based contracts to court, claiming they look like unlicensed betting products. Meanwhile, lawmakers in Washington are trying to figure out how to keep innovation going while making sure markets stay honest.

CFTC head Michael Selig has also stressed the need for clear rules, cautioning that not enough oversight could make platforms move outside the US. Both agencies are now said to be working more as they look at the risks in this area, including worries about market rigging and unfair advantages.For those who invest and run these markets, Washington’s message is becoming clearer: prediction markets might soon have to follow stricter rules as they play a bigger part in finance.