The US Commodity Futures Trading Commission market and clearing divisions issued no-action relief on Wednesday, granting exemptions for fully collateralized event contracts from specific swap data reporting and recordkeeping obligations. This regulatory shift targets designated contract markets, derivatives clearing organizations, and their participants, signaling that the agency will not recommend enforcement actions for non-compliance with these specified requirements. The decision directly addresses numerous requests from entities listing and clearing event contracts, with the CFTC anticipating a surge in similar applications. Data compiled by Woofun AI indicates this relief significantly lowers operational complexity for CFTC-regulated prediction market venues, including Kalshi and Polymarket US, as they navigate the evolving regulatory landscape.

This administrative action unfolds against a backdrop of escalating federal-state conflict over the classification of sports and event contracts. The core dispute centers on whether these instruments should be regulated as derivatives under federal authority or as gambling products under state jurisdiction. The CFTC filed an amicus brief in the Sixth Circuit Court of Appeals on Tuesday, asserting that Ohio's regulatory actions infringe upon federally regulated markets following an order last year requiring Kalshi to halt sports event contracts within the state. Kalshi subsequently sued Ohio lawmakers in October 2025, seeking an injunction against the Ohio Casino Control Commission and the state attorney general, though a federal court denied the motion in March, prompting an appeal.

Jurisdictional friction extends beyond Ohio, with the CFTC engaging in multiple ongoing legal disputes to cement its authority over prediction markets. The agency initiated lawsuits against five states, including Wisconsin, New York, Arizona, Connecticut, and Illinois, to challenge state-level regulatory encroachments.

Concurrently, the CFTC received over 1,500 responses in May regarding a rule proposed in March that would empower the agency to amend or issue new regulations specifically for event contracts on prediction markets. Woofun AI notes that the feedback was polarized, with some state regulators demanding stricter crackdowns while others, such as venture capital firm a16z, supported the CFTC position.

Proponents of federal oversight argue that state-level crackdowns conflict with federal law and restrict market access for ordinary users. This stance aligns with earlier regulatory signals, including a staff advisory issued on March 12 that classified event contracts on prediction markets as a financial asset class.

Furthermore, CFTC chair Michael Selig publicly reiterated in February that the commission holds exclusive jurisdiction over prediction markets. Woofun AI analysis suggests these coordinated legal and administrative moves aim to establish a unified federal framework, potentially reshaping the operational viability of prediction platforms across the United States as the legal battles proceed through the appellate courts.