The Commodity Futures Trading Commission's Division of Market Oversight has issued a new advisory calling on designated contract markets to follow required self-certification procedures for event contract series.

The guidance warns against a growing practice in which platforms submit broad, generic filings covering multiple unrelated event contracts. According to the DMO, these "boilerplate" submissions make it harder for regulators to determine whether each individual contract complies with the Commodity Exchange Act and CFTC regulations.

The commission said companies have recently been grouping very different types of wagers into a single application. The agency said that practice prevents it from properly verifying contract compliance and the accuracy of the information submitted. It cited the 2026 World Cup as an example, saying all matches from that tournament may be bundled into one submission, while separate tournaments must be filed individually because each is governed by different rules.

The advisory aligns with a broader CFTC proposal issued in June that sets out a formal framework for reviewing event contracts that may be in the public interest. It also comes as prediction markets — exchanges where participants trade derivative contracts whose payouts depend on the outcome of real-world events such as elections, sporting events, and economic indicators — face increased regulatory scrutiny amid rising trading volumes and participation from both retail and institutional investors.

CFTC previously encouraged collaboration with sports organizations

In March, the CFTC outlined its first clear playbook for contracts tied to real-world events such as elections and sports. Regulators recommended that platforms coordinate with sports authorities, comply with integrity standards, and follow the required self-certification procedures.

The agency argued that proper procedures could help platforms identify attempts to cheat or manipulate scores and could also make verification processes easier. Over the past 18 months, the CFTC has seen a dramatic rise in self-certified contracts, resulting in exponentially more versions of underlying contracts on regulated exchanges.

CFTC proposes new prediction market framework

Separately, the commission introduced draft regulations on Wednesday aimed at strengthening federal oversight of prediction markets and reducing rising fraud risks.

The CFTC's draft sets specific standards for sports contracts but excludes political and election-based markets from the strictest oversight categories. In a statement, Chair Michael Selig said the proposed framework balances strong oversight with market-driven innovation.

The agency preliminarily considers both sporting events and games of chance to be forms of gaming. However, it found that sports wagering is generally not contrary to the public interest, while betting on games of pure luck likely is.

The draft also "refers to the election bets as contests and not as gambling," indicating that such betting activities are not among the specific activities for which the CFTC must conduct a 90-day review of event contracts.

The proposed framework comes amid strong legal pushback from some U.S. states and Native American tribes seeking to ban sports-focused contracts, underscoring an ongoing jurisdictional tension between state gambling regulators and the federal derivatives oversight the CFTC administers over designated contract markets.

A few days ago, a court granted Washington's motion for a preliminary injunction preventing Kalshi from listing its so-called event contracts in the state. Massachusetts, Michigan, Nevada, and New York have also obtained court rulings restricting Kalshi's activities.

Prediction market platforms say they proactively self-report bad actors, but insider trading incidents have increased. More recently, Gannon Ken Van Dyke, a U.S. Special Forces soldier, allegedly collected more than $400,000 (£296,000) after placing a wager on Venezuelan President Nicolás Maduro's removal. Authorities also accused an Italian Google software engineer of using insider information to trade.

The CFTC, Kalshi, and Polymarket have nevertheless affirmed their commitment to combating insider trading as the proposed framework enters a 45-day public comment window, after which the commission may revise the rules before potential final adoption.