Establish and maintain rules to protect market participants from abusive practices (DCM Core Principle 12). 14 The DMO Advisory reminds DCMs and market participants that CFTC Regulation 180.1 separately prohibits the use of manipulative or deceptive devices in connection with any swap, or contract of sale of any commodity in interstate commerce, or contract for future delivery on or subject to the rules of any registered entity. The DMO Advisory also reminds DCMs of the CEA regulations they must keep in mind when submitting new contracts: they caution DCMs that offer sports-related event contracts in particular that overly broad contract specifications may inhibit the DCMs’ ability to comply with such regulations. The CFTC encouraged DCMs to work collaboratively with sports leagues and governing bodies when designing contracts that present heightened risks of manipulation. 15 The DMO Advisory follows the CFTC’s earlier withdrawal of Staff Letter No. 25-36 (the “Withdrawn Guidance”). Issued on September 30, 2025, the Withdrawn Guidance was addressed to the National Futures Association and all Futures Commission Merchants (“FCMs”), Introducing Brokers (“IBs”), DCMs, DCOs and registered future associations regarding the risk of state regulatory action and litigation around the listing, trading and clearing of sports-related event contracts. 16 The Withdrawn Guidance had sought to remind registered entities to make necessary disclosures and adopt appropriate risk management policies to account for such risk, and had noted that they should be prepared to identify such disclosures and policies to the CFTC in connection with routine registration with, and oversight and examination by the CFTC and applicable self-regulatory organizations. The DMO Advisory, unlike the Withdrawn Guidance, is directed only to DCMs and focuses on the growth and development of prediction markets. The tone is notably more favorable towards prediction markets than the Withdrawn Guidance, which focused more on warning of potential legal risks. The DMO Advisory views sports-related event contracts as an area of rapid growth and lists several ways for DCMs to collaborate with regulatory bodies in the space. Also notably, the DMO Advisory does not address the question of whether federal regulation pre-empts state laws on gaming or gambling (an issue which the CFTC is separately addressing through interventions in litigation, discussed below). In short, the DMO Advisory is firmly forward-looking, and suggests that the CFTC sees the growth in prediction markets as a positive development to be encouraged. 14 These Core Principles require, respectively, that listed contracts not be readily susceptible to manipulation, that DCMs maintain adequate surveillance and enforcement capabilities, and that DCMs protect market participants from abusive practices. 15 On March 19, 2026, Major League Baseball announced an official partnership with a designated contract market and signed an agreement with the CFTC to establish an “integrity framework.” See MLB Names Polymarket Exclusive Prediction Market Exchange Partner and Signs Agreement with CFTC to Establish Integrity Framework , Major League Baseball (MLB) Press Release (March 19, 2026), available at https://www.mlb.com/press-release/press-release-mlb- names-polymarket-exclusive-prediction-market-exchange-partner-and-signs-agreement-with-cftc-to-establish- integrity-framework; CFTC and MLB Sign Groundbreaking MOU (March 19, 2026), available at https://www.cftc.gov/PressRoom/PressReleases/9199-26. These appear to be clear examples of the type of collaboration and information-sharing the CFTC is encouraging.
CFTC Staff Letter No. 25-36 (Sep. 30, 2025).
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