CFTC Acting Chair Caroline Pham Suggests Policy Shift on Event Contracts

31.01.2025

The Commodity Futures Trading Commission (CFTC) may be on the verge of a major policy shift as Acting Chair Caroline Pham launches a series of roundtable discussions on the regulation of event contracts. The discussions will focus on political and sports-based contracts, areas that have long faced regulatory uncertainty.

This initiative signals a potential shift in the agency’s stance, moving away from previous efforts to classify political event contracts as gambling.

Instead, Pham aims to explore clear regulatory frameworks that could legitimize and oversee these markets rather than restrict them.

Why Event Contracts Are Gaining Attention

Prediction markets, including platforms like Kalshi, have grown in popularity, offering contracts on political outcomes, sports events, and other real-world occurrences.

However, these markets have faced regulatory uncertainty, with previous CFTC leadership treating them as unauthorized gambling activities rather than financial instruments.

Under the previous chair, Rostin Behnam, the agency actively opposed political event contracts, leading to legal battles, including a lawsuit from Kalshi challenging CFTC’s restrictions.

With Pham now at the helm, there is an opportunity to redefine the agency’s role in regulating these emerging financial products.

Key Areas of Discussion in the Roundtable Series

The upcoming CFTC roundtables will bring together industry leaders, public policy groups, and market experts to discuss several key regulatory issues:

  • Defining Event Contracts – Should political and sports-based contracts be treated as financial instruments or remain under gambling laws?
  • Regulatory Oversight – How can the CFTC establish clear guidelines that encourage market innovation while ensuring consumer protection?
  • Role of Prediction Markets – What impact do these contracts have on financial markets, public policy, and risk management?
  • Legal Frameworks for Political Contracts – Should the CFTC lift restrictions and provide official regulatory pathways for betting on election outcomes?

A Shift in CFTC’s Approach

Pham’s leadership brings a stark contrast to her predecessor’s regulatory stance. Under Behnam, the CFTC took an aggressive approach against platforms like Kalshi, arguing that political event contracts resembled gambling rather than legitimate financial products. This approach led to a legal standoff and increased pressure from market participants seeking clarity and legitimacy.

Pham has long opposed the outright banning of event contracts. She believes that instead of fighting these markets, the agency should create structured regulations that offer transparency, oversight, and investor protections.

What This Means for the Future of Event Contracts

If Pham follows through with a regulatory shift, the event contract market could see significant expansion. The CFTC may choose to:

  • Develop formal rules for political event contracts, offering legal clarity.
  • Expand oversight to sports-based contracts, especially as companies like Kalshi diversify their offerings.
  • Encourage innovation by creating a structured framework for new platforms like Robinhood Markets Inc. and Polymarket.

Those potential changes could open the door for a regulated and widely accepted prediction market, providing traders, institutions, and policymakers with new tools for risk assessment and financial strategy.

The roundtable discussions will play a crucial role in shaping the agency’s next moves. While no formal policy changes have been announced yet, the shift in tone suggests that the CFTC under Pham is willing to reconsider past regulatory roadblocks.