New CFTC-SEC Collaboration to Examine Event Contract Markets

• The Commodities Futures Tradition Commission and Securities Exchange Commission announced a new collaboration
• Both groups note they should examine opportunities to consider where event contracts are available in U.S. markets
• State regulators and prediction market companies are currently embroiled in legal battles to regulate event contracts

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A newly announced collaboration between the Commodities Futures Traditional Commission (CFTC) and Securities Exchange Commission (SEC) may lead to a closer examination of the event contract market and where contracts may be available in U.S. markets.

The CFTC and SEC announced the collaboration on Friday, Sept. 5, to ensure there is no regulatory “no man’s land” due to inaction by one or both agencies.

One point of evaluation? The event contract market, as state regulators and prediction market companies have been jockeying for position on who actually oversees the offerings.

Providing Clarity for Innovators

In a joint statement from CFTC Acting Chairman Caroline D. Pham and SEC Chairman Paul S. Atkins, the commissions recognize the need for clarity in the event contract market.

“Prediction markets, while they have existed around the world for decades, are undergoing rapid growth with growing demand from both market operators and the public. We should work together to provide clarity for innovators that want to list event contracts on prediction markets responsibly, including those based on securities. The SEC and CFTC should examine opportunities to collaborate to consider where event contracts may be made available to U.S. market participants regardless of where the jurisdictional lines fall.”

The event contract space will be discussed by both the SEC and CFTC during a scheduled roundtable on Monday, Sept. 29.

While the commissions agree clarity is needed, the CFTC is currently in a state of flux. Pham announced she would step down from the commission later this year, though a date for her departure has yet to be scheduled.

Her departure depends on the potential induction of presidential nominee Brian Quintenz as chair of the CFTC. President Donald Trump (R) nominated Quintenz for the position in February. Quintenz is a former CFTC commissioner who currently sits on the board of Kalshi.

However, his nomination hearing has been delayed several times by the Senate Committee on Agriculture, Nutrition, and Forestry, which has yet to give an official reason for the delay.

Typically, at full capacity the CFTC has five commissioners, but at the moment the commission is short staffed. In addition to Pham’s future departure, Commissioners Christy Goldsmith Romero and Summer Mersinger both left the CFTC in May, while Kristin Johnson will leave in late 2025.

Additionally, former full-time chair Rostin Behnam left the CFTC in February.

Quintenz may be the lone member of the CFTC if he is eventually inducted to the commission.

Who Regulates Event Contracts?

The scheduled roundtable between the CFTC and SEC, and its collaboration, may provide some much needed clarity for the event contract market. Questions on event contracts, especially sports event contracts, and who regulates the offerings has been a point of contention over the last year.

Companies such as Robinhood and Kalshi believe that state regulatory bodies do not have the right to intrude on the government’s “exclusive” authority to regulate prediction market, filing lawsuits in New Jersey, Nevada, and Maryland to defend its practices. These companies believe the CFTC is the only regulatory body that can legally block contracts from being offered to customers.

State gaming regulators maintain the markets need to be beholden to regulations, taxes, and license fees that sports betting and gaming operators are required to follow.

The prediction market companies believe their offerings are not required to comply with state laws, as they have been preempted by the Commodity Exchange Act.