Regulators define frameworks for expanding prediction markets

Regulators in the United States and Canada are defining the legal frameworks for the expanding prediction market industry. In the U.S., Commodity Futures Trading Commission (CFTC) Chair Michael Selig has proposed a regulatory roadmap to establish a permanent federal framework. This agenda includes defining event contracts, modernizing reporting requirements, and implementing new consumer protection and market-design standards to manage the growth of the sector.

Simultaneously, Canada-based Prospect Markets is expanding into the U.S. market. The company’s subsidiary, Prospect Trading USA LLC, has joined Crypto.com Derivatives North America, a CFTC-regulated exchange, to build its institutional trading infrastructure.

In Canada, the Canadian Securities Administrators (CSA) has signaled that prediction markets based on sports and entertainment should not fall under securities and derivatives legislation. Currently, Canadian platforms like Wealthsimple and Interactive Brokers are limited to trading prediction markets related to economic, financial, or climate matters.