CFTC warns prediction-market incentive filings are often deficient

The Commodity Futures Trading Commission warned on Aug. 12 that an increasing number of filings tied to prediction-market incentive programmes are incomplete or unclear, making it harder for staff to judge whether platforms have properly notified users of the terms and checked compliance with CFTC rules.

The advisory came from the Division of Market Oversight and reminded designated contract markets of their obligations when they self-certify market-maker, liquidity, trading or incentive programmes under Regulations 40.5 and 40.6. The commission said the problem is especially acute for event-contract products, where procedural or substantive defects can prevent staff from assessing whether the platform has met core principles and other Commission requirements.

The guidance also set out staff expectations for initial programme submissions, amendments, changes and filing procedures.

CoinDesk’s coverage of the guidance said the CFTC is particularly wary of reward structures that pay high-volume participants or help market-makers absorb losses through stipends and rebates. In the commission’s view, those arrangements can encourage trading just to hit volume targets and raise the risk of wash trading, pre-arranged trading and other manipulative conduct.

In March, the same division said designated contract markets must police event contracts through surveillance, real-time monitoring and rules that keep contracts from being readily susceptible to manipulation. In February, the enforcement division highlighted cases on KalshiEX involving misuse of nonpublic information and fraud in prediction markets.

In June, it proposed amendments to better define which event contracts could be found contrary to the public interest, and its draft said trading volume across CFTC-registered prediction markets exceeded $25 billion in 2025, compared with a futures market the agency put at roughly $31 trillion in notional value.