CFTC issues blanket no-action letter on prediction markets, relieving swap data reporting duties

The Commodity Futures Trading Commission's staff has issued a no-action letter that effectively relieves swap data reporting and recordkeeping requirements for prediction market platforms.

According to the announcement published on Wednesday, the CFTC's Division of Market Oversight and Division of Clearing and Risk said they will not recommend the agency to launch enforcement actions against designated contract markets (DCMs) and clearinghouses for failing to abide by such reporting requirements.

"This position is in response to numerous requests from DCMs and DCOs that list and clear event contracts," the announcement said. "The divisions intend for today's no-action position to streamline the process for addressing such requests and to ensure uniform treatment of market participants."

The no-action letter was published to eliminate regulatory uncertainty for platforms offering event contracts, which technically qualify as "swaps" in that they are based on events with binary outcomes. 

"Such contracts may meet the 'swap' definition, but are listed for trade by DCMs (rather than swap execution facilities) and have similar characteristics as futures and options on futures, including highly-standardized terms, exchange-trading protocols, fungibility, and offset," the letter said. "Accordingly, this letter would allow for firms to report certain event contracts directly to the Commission in a form similar to that provided for futures and options."

The letter currently lists 19 beneficiaries, including Polymarket US, Kalshi, Gemini Titan, and Bitnomial. CFTC added that entities wishing to list event contracts may request the no-action position.

Tug-of-war

Amid the explosive growth of prediction markets, the legal tug-of-war between federal and state authorities over event contracts continues. Multiple states claim that prediction markets on sports amount to unlicensed sports betting, while the CFTC maintains that these platforms fall under its federal oversight as derivatives markets.

Earlier this week, the CFTC challenged Ohio's 2025 complaint against Kalshi, arguing that the state is overstepping federal jurisdiction.

"The federal district court in Ohio took an improperly narrow view of the Commission's jurisdiction, and we are asking the Court of Appeals to correct that error," CFTC Chair Michael Selig said in a statement on Tuesday. "As I've said repeatedly, the CFTC will not allow overzealous state governments to undermine the agency's longstanding authority over these markets."