CFTC Grants No-Action Relief for Event Contract Trading Platforms

Highlights:

• The CFTC eased reporting rules for platforms offering prediction market event contracts.
• Event contract trading platforms received fresh relief from selected swap reporting requirements.
• Several states still oppose federally regulated prediction market platforms.

The U.S. Commodity Futures Trading Commission issued fresh no-action relief for prediction market platforms on May 12 after exchanges requested clearer reporting rules. The agency’s Division of Market Oversight and Division of Clearing and Risk released the letter to ease selected swap data reporting and recordkeeping duties tied to fully collateralized event contracts.

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CFTC Issues No-Action Relief for Event Contracts

CFTC issued no-action relief for fully collateralized event contracts, exempting DCMs, DCOs and market participants from certain swap recordkeeping and reporting requirements.

The agency also introduced a streamlined process for… pic.twitter.com/Rltnj28QGB

— Wu Blockchain (@WuBlockchain) May 14, 2026

CFTC staff said they will not recommend enforcement against designated event contract trading markets, derivatives clearing organizations, or participants following the letter’s conditions. The relief also covers firms listing and clearing approved event contracts.

The no-action letter removes some reporting and recordkeeping duties for covered event contracts. The relief also allows firms to report certain contracts using formats similar to futures and options contracts. However, the CFTC excluded contracts tied to terrorism, war, and some political activities from the relief. Existing agency rules classify those contracts as against the public interest. The updated letter also keeps earlier firms under the same reporting relief.

The CFTC also created a process allowing new exchanges and clearinghouses to request inclusion under the same framework. New applicants can now join the appendix instead of waiting for separate staff letters. The agency said the updated process should simplify reporting treatment for platforms listing approved event contracts.

Event Contract Trading Gains Support From Major Platforms

The agency said event contracts can qualify as swaps under existing derivatives laws because payouts depend on specific outcomes. Those outcomes include elections, weather events, economic indicators, and company earnings. Exchanges and clearinghouses had to follow swap reporting rules because some event contracts fell under swap definitions. Several exchanges told the CFTC that those rules increased compliance work for retail-focused contracts involving smaller trade sizes.

Several exchanges also told the CFTC that current swap reporting systems do not fit prediction markets handling thousands of small retail trades. Platforms argued that event contracts operate differently from traditional swaps and futures products. Consequently, firms requested reporting standards designed specifically for event contracts. The agency said the latest relief responds directly to those industry concerns. Kalshi CEO Tarek Mansour also recently said event contracts could eventually become a trillion-dollar market.

State Challenges Keep Pressure on Prediction Markets

Several states have been challenging federally regulated prediction markets despite the latest reporting relief. Ohio officials argued that sports-related event contracts resemble unlicensed sports betting products under state law. However, the CFTC defended Kalshi during an Ohio appeal involving federal oversight of event contracts.

The CFTC just made the prediction-market fight much bigger than "sports betting vs event contracts."

In a May 12 Sixth Circuit amicus brief in KalshiEx LLC v. Schuler, the agency says prediction markets fall under its exclusive federal jurisdiction — and that state gambling laws…

— PredictionMarkets.us (@USPredict) May 14, 2026

The agency argued during the appeal that federal derivatives laws cover event contracts instead of gambling laws. The Ohio case will determine whether federal regulators or state gambling agencies oversee sports-related event contracts.

The CFTC also challenged state actions involving Arizona, Connecticut, Illinois, New York, and Wisconsin. Federal regulators classify many event contracts as derivatives, while several states classify sports-related contracts as gambling products.

The no-action letter for event contract trading came months after Michael Selig introduced the Innovation Task Force to oversee fast-changing financial technology across U.S. derivatives markets. The new unit will focus on crypto assets, blockchain systems, artificial intelligence, autonomous tools, prediction markets, and event contracts. Selig said the agency wants clearer guidance for firms entering emerging sectors while keeping U.S. derivatives markets competitive.

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