The Commodity Futures Trading Commission is reviewing incentive programs used by prediction market platforms, with an announcement of regulatory action expected by the end of the week, according to reporting from Front Office Sports on September 29.
The review covers bonuses and incentives offered to both traders and market makers. Chairman Michael Selig has not settled on a final approach, but some form of action is anticipated. The CFTC declined to comment, and as of Wednesday, no announcement had appeared on the agency's website.
Compliance Deadline Passed
The review follows a deadline for exchanges to bring incentive programs into compliance. On August 12, the CFTC's Division of Market Oversight issued a staff advisory requiring exchanges to review their programs and submit amendments by September 14. One source told Front Office Sports that the CFTC has been "frustrated" that companies have not complied, citing "a slew of programs deemed to be misleading."
Problematic Program Designs
The staff advisory identified several incentive structures raising concerns:
- Volume-based rewards with steep tiers or threshold bonuses that could encourage wash trading
- Market-maker programs that guarantee profits or cover losses through stipends and rebates
- Unlimited rebates and "risk-free" trades
- "Secret discount codes" and informal VIP perks
- Sweepstakes-like or randomized rewards, including spin-the-wheel promotions and casino-style mechanics
The advisory applies to incentives delivered through affiliates and other intermediaries, making exchanges responsible for third-party promotion of their programs.
Examples Under Review
Platforms including Kalshi, Polymarket, and Novig offer sign-up credits and other incentives that could draw the agency's attention. Affiliate sites list Kalshi and Polymarket US sign-up credits of $25 and $50, respectively. In July, affiliates advertised a Kalshi offer paying randomly determined bonuses, with 70 percent of users receiving $15 and 0.35 percent receiving $500, according to Event Horizon.
The review represents a rare regulatory move against the prediction market industry by an agency that has largely supported it in legal disputes, having sued nine states over their attempts to block sports event contracts.
