The Commodity Futures Trading Commission (CFTC) has shown leniency in a recent letter regarding predictions or officially termed “events” markets.
The move signals an opening for the prediction/event marketplace, made famous by the likes of Polymarket and Kalshi, a growing frontier of gambling which could contribute trillions to the American economy.
CFTC letter marks easing of restrictions on prediction markets
The letter, which was published by the CFTC’s official press room, made it clear that this “no-action” was in relation to business involving Railbird Exchange LLC (Railbird) and QC Clearing LLC (QC), a derivatives clearing organization.
A key part of the CFTC’s Division of Market Oversight and the Division of Clearing and Risk letter related to this leniency applies only in “narrow circumstances.” This is an exemption given to similar markets, but it does not entirely rule out regulatory action being applied to Railbird for its actions in the future.
However, this decision could change the fate of prediction markets, which are making moves to become further ingrained into the American market. It’s akin to the business between event markets and smaller registered entities being noticed by the regulator, but not being hampered.
Railbird needs QC to ensure the settlement functions for trades are compliant and to manage any risks involved in the completion of trades. Essentially, Railbird is the shopfront and the counter where a consumer can decide to stake on an event, and QC takes the strain of making sure the transaction and the legitimacy of the transaction is compliant.
What are event markets?
Event markets, like Railbird, allow registered users to bet on stocks, weather patterns, and election results. The likes of Polymarket and Kalshi, which we have reported on in great detail, show a definite appetite for this kind of event market staking.
The road to riches wasn’t always an easy one, as initially, state regulators and registered gambling operators such as DraftKings and BetMGM were unhappy that these markets were being given an unfair advantage.
“This paves the way for us to welcome American traders again. I’ve waited a long time to say this: Polymarket is coming home.” – Shayne Coplan, Polymarket CEO
Kalshi won a pyrrhic victory over the complaining parties, and the CFTC dropped its lawsuit against the company. Prompting the Kalshi CEO, Tarek Mansour, to post the outcome on social media.
“It’s official. The D.C. Circuit has granted the CFTC’s unopposed motion to dismiss its appeal in the Kalshi lawsuit over whether congressional control contracts involve “gaming.” The appeal is dismissed.”
Brian Quintenz, the former commissioner of the CFTC, has been serving as a senior member of the Kalshi board and is now facing a hearing to appoint him as the possible head of the CFTC.
He has stated that he will step down from his position at Kalshi if appointed. Decisions like the CFTC dropping the case and his looming appointment suggest a softer approach is on the horizon for events staking markets.
Prediction markets are staking their claims in the US market
As we reported, Polymarket acquired a smaller company, QCEX, which operates as a Commodity Futures Trading Commission-licensed derivatives exchange. The deal was set in stone for $112 million.
Shayne Coplan, founder and CEO of Polymarket, said, “This paves the way for us to welcome American traders again. I’ve waited a long time to say this: Polymarket is coming home.”
Kalshi and Flutter Entertainment’s FanDuel have also flirted with the idea of teaming up to provide prediction markets, and rumors abound that DraftKings is looking to enter the fray.
CEO of DraftKings, Jason Robins, recently spoke during a 2025 Q2 earnings call about possibly entering the predictions market.
“I do think being an early mover in a space like this can be important,” Robins said. “I also think that being a literal first mover may not be as important. There are downsides to that as well. We’re evaluating. Obviously, we have a lot of stakeholders, state regulators, relationships with tribes, and others that we make sure that we consider as we think about what our different options are. We’re keeping a close eye on it and figuring out what we want to do.”
Featured Image: Railbird official
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