Wednesday, May 14, 2008

CFTC Considers Regulating Prediction Markets

In what may be the biggest news for the nascent industry yet, the Commodity Futures Trading Commission (CFTC) is hinting that it may be ready to regulate political prediction markets. A recent press release touts the evolution of markets and encourages members of the public to submit comments about whether they should be grantd full legal status in the United States:

CFTC Requests Public Input on Possible Regulation of “Event Contracts”
Washington, DC – The Commodity Futures Trading Commission (CFTC) is asking for public comment on the appropriate regulatory treatment of financial agreements offered by markets commonly referred to as event, prediction, or information markets.

During the past several years, the CFTC has received numerous requests for guidance involving the trading of event contracts. These contracts typically involve financial agreements that are linked to events or measurable outcomes and often serve as information collection vehicles. The contracts are based on a broad spectrum of events, such as the results of presidential elections, world population levels, or economic measures.

“Event markets are rapidly evolving, and growing, presenting a host of difficult policy and legal questions including: What public purpose is served in the oversight of these markets and what differentiates these markets from pure gambling outside the CFTC’s jurisdiction?” said CFTC Acting chairman Walt Lukken. “The CFTC is evaluating how these markets should be regulated with the proper protections in place and I encourage members of the public to provide their views.”

See full press release here

Obviously, great news for traders, entrepreneurs, and armchair prediction-market pundits alike. Whether you've studied the accuracy of prediction markets, written about the tax implications of legalizing them, or are simply looking for a recession-proof way to make a bundle while Wall Street gets walloped, it's time to chime in. Submit your comments to

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