The U.S. Commodity Futures Trading Commission on Wednesday released new compliance guidance telling prediction market platforms under its jurisdiction to review how they file and operate incentive programs. The agency said recent filings for those programs were 「procedurally or substantively deficient」, leaving regulators unable to properly assess whether platforms had fully disclosed program terms and related compliance risks.
The guidance adds to a string of recent actions around prediction markets. According to the source material, the CFTC had already warned platforms to stop using 「cookie-cutter」 self-certification language. The report also notes that the New York City Council is investigating what it described as 「predatory marketing」 tied to prediction markets, with letters sent to Kalshi, Polymarket, Coinbase, and Gemini.
Volume incentives draw direct scrutiny
The first major compliance concern centers on rewards for high-volume traders. The CFTC said rebate and points systems designed to attract high-frequency activity may push participants to 「trade solely to reach volume targets」. In the regulator’s view, that raises the risk of wash trading, prearranged transactions, and other fraudulent, manipulative, or disruptive market conduct.
The source material links this concern to patterns seen in the earlier growth phase of crypto exchanges, when some platforms used trading rebates and token listing campaigns to create artificial liquidity and later faced regulatory action. It says similar structures are now appearing on prediction market venues supervised by the CFTC.
Market-maker profit guarantees also flagged
The second issue involves market-maker programs. In the guidance, the CFTC points to arrangements where platforms encourage firms to quote both sides of a market and then use stipends and rebates to guarantee net profits or compensate for losses. The agency said that structure can encourage fraud and market manipulation.
As described in the source material, a market maker that expects losses to be covered by the platform may shift away from price discovery and instead focus on extracting incentive payments. The examples cited there include self-trading, hedging arbitrage, and deliberately pushing contract prices lower or higher. Without close monitoring, the report argues, that would distort the role of prediction markets as a signal of collective judgment.
A support-and-restraint approach
The report describes the CFTC’s role in prediction markets as a dual track. On one side, it has been a key institutional backer of the sector’s ability to survive and expand in the U.S., including by challenging state-level attempts to shut down platforms such as Kalshi and Polymarket under gambling laws. On the other, it is moving to define compliance boundaries more quickly as the market develops.
- June 2026: the CFTC proposed its first rule package focused specifically on prediction markets.
- July 2026: it issued a warning telling platforms to avoid 「cookie-cutter self-certifications」.
- Aug. 12, 2026: the latest guidance was released, focused on incentive program compliance.
The source material says this is not a formal new regulation. It is presented instead as an application reminder under existing Designated Contract Market, or DCM, rules. Even so, the message is direct: the CFTC is not willing to overlook weak compliance just because it has opposed pressure from some states against prediction market operators.
What the guidance says
In its latest notice, the CFTC said prediction market platforms must properly file their programs and avoid structures that could encourage improper conduct. Based on the source material, the guidance does not create a separate standalone regime. It tells platforms that incentive design, disclosures, and risk controls still need to fit within the current compliance framework.
The article also says the guidance may be relevant to regulators in Taiwan. It notes that Taiwan does not yet have a clear legal classification for prediction markets, treating them as neither futures nor gambling, while some prediction-like perpetual products on crypto exchanges are already under financial scrutiny. In that context, the report says the CFTC approach could serve as a reference if Taiwan later opens the door to prediction markets or similar derivatives trading platforms.