The US Securities and Exchange Commission (SEC) has highlighted the divisive prediction markets sector as a topic of huge importance. As a result, the SEC is seeking alignment of its vision with the Commodity Futures Trading Commission’s (CFTC) stance.
Prediction Market Regulations Remain a Point of Contention
Prediction markets are a novel form of entertainment that, as the title suggests, allows customers to predict the outcomes of certain events. Instead of staking money on the result, however, prediction markets allow customers to buy “yes” and “no” shares in the outcome of various sporting, political, and cultural events.
As CFTC-regulated platforms, prediction markets can reach across all states, unlike their sports betting peers, which have to navigate the complex regulatory landscape in the US. Traditional sportsbooks, tribal operators, and gaming regulators have all argued that prediction markets are products that are clearly similar to betting, but that do not follow the same rules, setting a dangerous precedent.
With regulations still blurry, the SEC is now seeking coordination with the CFTC to enhance the regulation of prediction markets and sort out any remaining uncertainties.
SEC’s Atkins Confirms a Potential Responsibilities Overlap
At a recent Senate Banking Committee hearing, Paul Atkins, chair of the SEC, confirmed that his agency continues to discuss the prediction markets regulation matter with the CFTC on a regular basis, meeting at least once a week.
He suggested that there is a potential overlap in the responsibilities of the SEC and CFTC when it comes to prediction markets. Atkins emphasized that the two agencies should coordinate their efforts and foster a meaningful relationship with one another.
However, Atkins didn’t indicate that any regulatory changes are coming, but noted that this could change depending on Congress talks. He also reaffirmed that the SEC doesn’t treat prediction markets as gambling, saying that a security remains a security regardless of other specifics.
CTFC Unveils Innovation Advisory Committee
In other news, the CFTC chair, Michael Selig, just unveiled the Innovation Advisory Committee – a new body designed to help the agency shape policy for emerging financial products, leveraging the expertise of executives, academics, and infrastructure leaders.
Notable members of the new committee include Shayne Coplan of Polymarket and Tarek Mansour of Kalshi, two of the most prominent figures in the prediction market industry.
