In recent years, we have seen an explosion of interest in prediction markets (exchange-traded platforms where participants buy and sell contracts based on the outcome of future events, such as elections, sports, or economic trends). As these markets grow in popularity, they have reached a critical juncture: the need for a clear, durable, and innovation-friendly regulatory framework.
Today, The Digital Chamber (TDC) is proud to announce our Prediction Markets Working Group, a dedicated initiative designed to emphasize the value of these markets and ensure they have a modern and workable regulatory framework within the U.S. financial system.
Our launch begins with a formal letter addressed to CFTC Chair Selig. This letter is the first step in what we anticipate will be a sustained, multi-year effort to bring clarity to a historically important yet often misunderstood segment of finance.
In our letter, we applauded Chair Selig’s recent statements regarding the intent for CFTC staff to provide tailored rulemaking and guidance for this rapidly growing segment of the financial and digital asset industries. For too long, operators in this space have navigated a maze of regulatory ambiguity including unclear overlaps between federal and state regulators. We are urging the CFTC to move beyond “regulation by enforcement” and instead initiate formal rulemaking that reinforces a coherent federal framework.
Prediction markets are powerful tools for price discovery and information aggregation. By allowing participants to trade on the outcome of future events, these platforms generate high-quality data that can be used by businesses, policymakers, and researchers to manage risk and make informed decisions.
Below, please find TDC’s Prediction Markets Working Group’s initial action-oriented agenda to drive the industry forward:
- Engaging directly with the CFTC, congressional committees, and key policymakers to clarify the treatment of event contracts under the Commodity Exchange Act.
- Developing policy principles to distinguish regulated prediction markets from traditional gambling, emphasizing risk management, market integrity, and consumer safeguards.
- Submitting comment letters and formal policy recommendations addressing self-certification standards, contract design, and listing practices.
- Publishing legal and economic research explaining the historical role of prediction markets in U.S. financial markets and their public value in price discovery and information aggregation.
- Building a coalition of market participants and institutional stakeholders to support a durable, innovation-friendly regulatory environment for prediction markets.
- Participating in litigation through friend-of-the-court briefings to educate courts on the CFTC’s historic regulatory exclusivity on this area of financial regulation.
We look forward to working with our members, legislators, courts, and the applicable administrative agencies in developing a thoughtful and durable framework for this emerging market segment.
If you have any questions, please reach out to policy@digitalchamber.org.