The Growth of Prediction Markets

Core Insights - The CFTC has been involved in regulating prediction markets, particularly event contracts related to elections and sports, which have seen rapid growth following legal victories against prohibitions [1][2][3] - The emergence of various prediction market platforms, such as Polly Market, indicates a diversification in the types of events that can be bet on, expanding beyond elections to include sports and other performances [2][4] - Recent legal cases involving allegations of performance manipulation by athletes highlight the risks associated with prediction markets, particularly in sports betting [5][6][15] Regulation and Compliance - The CFTC has a core competency in regulating designated contract markets, but there is a learning curve as these prediction markets are relatively new [11][12] - There is a need for increased awareness and training regarding compliance and the risks of insider trading within these markets [9][10][15] - Registered prediction markets must ensure their contracts are not susceptible to manipulation and comply with regulatory obligations to avoid liability [17][18] Market Growth and Trends - Prediction markets have gained popularity and are now considered a permanent asset class, with their influence evident in various sectors, including politics and sports [19][20] - The ability of prediction markets to provide early insights into outcomes, such as election results, demonstrates their growing significance compared to traditional sources [20]