SEC, CFTC Seek Comment on Prediction Markets as $0.5 Trillion Polymarket Tests Jurisdiction
Updated
Updated · CNBC · Jul 16
SEC, CFTC Seek Comment on Prediction Markets as $0.5 Trillion Polymarket Tests Jurisdiction
3 articles · Updated · CNBC · Jul 16
Summary
A joint SEC-CFTC request for public comment last month opened a formal push to update and harmonize rules for prediction markets, a fast-growing corner of derivatives long led by the CFTC.
The review centers on whether some event contracts are actually securities-based swaps under Dodd-Frank, which could pull the SEC into oversight when contracts hinge on a single public company or its financial condition.
Polymarket said it has engaged both agencies on definitional frameworks, while CBOE is already seeking to list company KPI-linked binary options under the SEC's regulatory umbrella.
Legal experts still expect the CFTC to remain the primary regulator, with the SEC in a supporting role, but clearer boundaries could speed Wall Street adoption while also bringing tighter compliance and investor protections.
The effort follows a March memorandum of understanding between the agencies and comes at a politically aligned moment, with only three SEC commissioners seated and the CFTC down to a single sitting member.
As regulators divide control, will prediction markets become a serious asset class or be regulated more like online gambling?
With employees betting on corporate secrets, are companies prepared for the new insider trading risks from prediction markets?
The Future of U.S. Prediction Markets: Federal Regulation, State Preemption, and Congressional Action in 2026
Overview
In June 2026, the SEC and CFTC began working together to create unified rules for prediction markets, starting with a joint request for public input. This collaboration is part of a larger effort by both agencies to harmonize their approaches and reduce confusion over who regulates these markets. By aiming for a single, predictable legal framework, the SEC and CFTC hope to make it easier for prediction market operators and investors to understand the rules, encourage legitimate activity, and build confidence in the sector. These steps mark a major move toward clearer and more consistent regulation.