CFTC Prediction Market Rules Rewrite May Backfire, Experts Warn

The Commodity Futures Trading Commission (CFTC) is rewriting rules for prediction markets in an effort to strengthen its case against lawsuits, but experts say this move may only give opponents another avenue to challenge the regulator.

Amanda Fischer, policy director and COO of Better Markets, argued that CFTC Chairman Michael Selig's rulemaking drive is a 'feeble attempt' to redefine gaming in a way that excludes sports and other products from restrictions on event contracts. She claims this is an effort to shore up the federal case for prediction markets after platforms suffered damaging setbacks in court.

The CFTC has been taking an increasingly assertive position under Selig, with the regulator beginning a new prediction-market rulemaking process in March and proposing amendments to Regulation 40.11 in June. However, Fischer believes this move is 'backfilling,' aiming to prepare its position for future court battles.

Fischer also argued that the industry had weakened its own legal position by launching sports contracts before securing a clearer regulatory framework, effectively choosing to 'ask for forgiveness, not permission.'