Prediction Markets for the U.S. Congress
The CFTC (U.S. Commodity Futures Trading Commission) has decided to approve a new contract for U.S. prediction market provider KalshiEX to predict and bet on which party will win a majority in both houses of the U.S. Congress. A meeting will be held on June 26th. At this meeting, we will discuss whether to conduct a “90-day formal review.”
The CFTC is the US regulator responsible for overseeing commodity futures trading and derivatives markets. KalshiEX is a centralized prediction market platform founded in 2018 and approved as a designated contract market (DCM) under CFTC regulation in 2020.
Kalshi already offers a variety of contracts, but cash-settled binary contracts related to the US Congress fall into a different category than general derivatives because they involve political events.
In order for this contract market to fall within the scope of CFTC regulation, it must be approved by the CFTC. The CFTC assesses whether contracts are fair and transparent and have measures in place to minimize the risk of market manipulation or fraud. It also considers the protection of market participants and the soundness of the market.
Kalshi had applied to the CFTC for review to launch a prediction market for midterm candidates for the US presidential election on November 8, 2022, but withdrew the application. This time, they have prepared new documents to be submitted and applied for review to the CFTC again.
What is a prediction market?
A prediction market is a platform for trading contracts on events and outcomes. Prediction market platforms such as PredictIt and Polymarket are constrained to operate in the United States.
PredictIt, which is run by New Zealand’s Victoria University of Wellington, has appealed the CFTC’s decision to downsize its business and impose certain restrictions. PredictIt deals with the prediction market for US elections and sporting events. Meanwhile, Polymarket, a decentralized prediction market built on the Ethereum (ETH) blockchain, has been fined $1.4 million by the CFTC and banned from doing business in the United States.
connection:DeFi prediction service Polymarket withdraws from US