The U.S. Commodity Futures Trading Commission released its first employee guidance for 2026 this week, providing guidance on the listing and trading of event contracts for designated contract markets, legal advisors, and other stakeholders. The guidance comes amid frequent suspicions of insider trading in the prediction markets—from the resignation of the Venezuelan president to military invasions by Iran, and details of the State of the Union address, all of which have raised concerns about manipulation. In plain terms, as the market grows, regulation needs to keep pace to prevent insider trading. Interested in the latest developments in prediction market regulation? Follow PASA's official website continuously.
Integrity Core: Exchanges must establish rules to monitor trading
Frank Fisanich, Acting Director of the CFTC's Division of Market Oversight, noted in the document that the statutory core principles for designated contract markets require exchanges to establish and enforce trading rules to monitor trading activities to maintain the integrity of the derivatives market. Although the NHL and MLS have established commercial partnerships with the prediction markets, the NBA has not yet signed. With March Madness approaching, Kalshi alone has launched 341 basketball event contracts, covering college leagues and the NBA. Insider information such as player injuries could affect contract prices—former NBA guard Damon Jones was once sued for allegedly providing undisclosed information about LeBron James' injury to bettors.
Rule Improvement: Prohibit assassination and war contracts, solicit public comments
The CFTC also issued a pre-rulemaking notice on the same day, soliciting public comments on revising or establishing new rules for prediction market event contracts. Current CFTC Rule 40.11 explicitly prohibits designated contract markets from listing event contracts involving assassination, terrorism, and war. The provisions of the 2010 Dodd-Frank Act expanded the scope of the Commodity Exchange Act, and the CFTC believes it has exclusive jurisdiction over event contracts. Chairman Michael Selig stated that this move is an important step in promoting responsible innovation in the derivatives market and will fully listen to all parties during the 45-day comment period.
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