Polymarket Files Parlay Contract Certification With CFTC as SEC Seeks Input on Prediction-Market ETFs

Polymarket and Kalshi let users trade event contracts tied to elections, sports and other outcomes, blurring the boundary between derivatives and gambling. The Commodity Futures Trading Commission says the Commodity Exchange Act gives it exclusive federal jurisdiction over contracts listed on registered exchanges. States counter that sports-heavy platforms are effectively unlicensed betting businesses subject to local gambling laws. The dispute carries fiscal stakes: the American Gaming Association estimates states have missed out on more than $1.2 billion in tax revenue since sports event contracts emerged.

On July 27, 2026, U.S. District Judge Katherine Menendez issued a preliminary injunction blocking Minnesota’s first-in-the-nation prediction-market ban before its scheduled Aug. 1 start. The law would have made operating, hosting or advertising covered markets a felony punishable by up to five years in prison and a $10,000 fine. Menendez found the CFTC, Polymarket and Kalshi were likely to prevail on federal pre-emption claims and faced irreparable harm, leaving the state law suspended while the litigation proceeds.

Prediction markets let traders take positions on outcomes ranging from sports contests to elections. Their rapid expansion has put the Commodity Futures Trading Commission at the center of a jurisdictional fight over whether event contracts are federally regulated derivatives or gambling subject to state oversight. For CFTC-regulated designated contract markets, self-certification can speed listings, but exchanges must still show that each product complies with the Commodity Exchange Act, settlement rules and core principles.

The CFTC’s Division of Market Oversight issued its latest advisory on July 24, warning platforms including Kalshi, Coinbase, Polymarket and Crypto.com against broad, template-style filings that combine many contract permutations. Each proposed variation must include its terms, underlying commodity, settlement methodology, data sources and compliance analysis under Regulation 40.2, the agency said. The notice was the regulator’s second warning in several months, following guidance on March 12, though closely related contracts may still be certified as a class.

Prediction markets have traditionally operated on a fully funded basis, requiring users to put up the entire amount of a wager. As the sector moves into the mainstream, leverage and margin trading are becoming critical to attracting institutional capital and expanding the market. The shift could lower users' funding requirements and boost liquidity. It also marks prediction markets' formal evolution toward traditional financial derivatives, setting up a pivotal battle between the two market leaders for a share of the regulated U.S. market.

A Polymarket subsidiary filed with the National Futures Association on July 3, 2026, seeking registration as a futures commission merchant to offer margin trading. Rival Kalshi had already secured the status in March of the same year. If Polymarket subsequently wins approval from the U.S. Commodity Futures Trading Commission, competition between the two companies in leveraged contracts in the United States is set to intensify significantly.

Polymarket is a prediction market where event contracts allow users to trade on outcomes including elections and sporting events. On January 3, 2022, the CFTC found that it was operating an unregistered trading platform, imposed a $1.4 million penalty and ordered it to exit the United States. As the platform returns to the U.S. market, questions over whether its marketing misled consumers are also affecting the division of gambling oversight among federal, state and tribal governments.

Republican Senator John Curtis and Democratic Senator Adam Schiff wrote to CFTC Chairman Michael Selig on June 25, requesting by July 10 an explanation of whether the agency was investigating. A June 20 report reviewed more than 1,100 videos from 10 creators and found that about 70% showed simulated trades, presenting nearly $1.9 million in fictitious profits. Polymarket has begun auditing the content.

Polymarket is a blockchain-based decentralized prediction market where users can trade on the outcomes of political, economic and other events. Prediction markets may face restrictions under Japan’s gambling laws, making government approval critical to Polymarket’s expansion in Asia and its approach to regulatory compliance. Approval would also affect the platform’s strategy to reduce its reliance on the U.S. market and regulatory environment.

Polymarket is planning to begin lobbying in Japan as it seeks a license to operate a prediction market by 2030. The effort is being led by Mike Eidlin, Japan head of cryptocurrency exchange Jupiter. No application date, investment amount or specific launch schedule has been announced. The immediate challenge is clarifying and overcoming barriers posed by Japan’s gambling laws.

Polymarket offers blockchain-based binary event contracts. The CFTC found that it had operated an unregistered derivatives market and, on January 3, 2022, imposed a $1.4 million penalty and ordered it to wind down noncompliant markets. Its main international platform has blocked US users since then. Lifting the ban would allow Polymarket to challenge regulated rival Kalshi in the United States with its full product offering.

Bloomberg reported on April 28 that Polymarket was negotiating with CFTC Chairman Michael Selig to amend the 2022 settlement terms and allow US traders back onto its international platform. The company has spent $112 million to acquire licensed exchange QCEX and launched the regulated Polymarket US in late 2025. It also filed a self-certification with the CFTC for sports parlay contracts on May 20, but reopening the main platform to US users still requires regulatory approval.

Polymarket is a decentralized prediction market where users trade on the outcomes of real-world events, traditionally focusing on elections, sports and crypto assets. Its adoption of standardized price feeds aggregated by Pyth Network from trading firms and market makers marks an expansion into traditional financial assets. It also reduces the risk of settlement disputes arising from manual pricing or reliance on a single exchange.

On April 2, 2026, Polymarket added contracts covering daily price moves and closing prices for U.S. stocks, indexes, ETFs, gold and crude oil. The offering spans more than 12 U.S. stocks, including Tesla, Nvidia and Apple, with contracts settled automatically using real-time Pyth price feeds. A week earlier, New York Stock Exchange parent ICE had invested $600 million in Polymarket and planned to acquire up to an additional $40 million in shares.

Polymarket is a decentralized prediction market where traders use crypto assets to wager on the probability of events. Its nuclear contracts allowed them to bet on whether a nuclear explosion would occur by a specified deadline. While such markets can aggregate risk expectations, they have raised ethical and regulatory concerns because people with access to military intelligence could profit and mass casualties could be commodified. The U.S. Commodity Futures Trading Commission is also tightening rules for event contracts.

Amid the conflict involving Iran and growing concerns about insider trading on wars, Polymarket removed its long-term nuclear detonation markets on March 4, 2026. A 2023 contract at one point implied a 19% probability of a nuclear explosion and drew nearly $700,000 in trading volume, while a contract expiring in June 2025 was once priced at 12% and recorded more than $1.7 million in cumulative volume. On May 10, 2024, the CFTC proposed barring regulated platforms from listing contracts involving war, terrorism or assassination.