The U.S. Commodity Futures Trading Commission is thinking about prediction markets and is inviting public comments on several questions as it attempts to sort out questions of public interest and appropriate regulatory treatment. (Now that I've mentioned that the CFTC is concerned with prediction markets, I'll switch to the term the CFTC uses, "event contracts.") According to a "Concept Release on the Appropriate Regulatory Treatment of Event Contracts" issued by the CFTC last week, the agency seek public comment to help determine:
- Whether event contracts are within the Commission's jurisdiction and if so, why (or why not)?
- If event contracts are within the Commission's jurisdiction, should there be exemptions or exclusions applied to them and if so, why (or why not)?
- How should the Commission address the potential gaming aspects of some event contracts and the possible pre-emption of state gaming laws?
The concept paper provides a brief review of the CFTC's experience with event contracts, namely a "no-action letter" issued by the Commission to the Iowa Electronic Markets, then discusses various elements of the Commission's legal mandate that may be related to its possible jurisdiction over event contracts. Finally, the CFTC lists twenty-four questions on which it specifically seeks comment.
And from Tyler Cowen at Marginal Revolution:
Here you will find regular updates on prediction markets, with the blog-like news function here. You'll see there that the CFTC is requesting public comments on how to regulate "event contracts." The site is launched by these people.
I thank Chris F. Masse for the pointer.
Here's the site:
This special interest group has been established as a resource for researchers and practitioners who are interested in the field of prediction markets....
...Being part of Forecasting Principles, this SIG aims at presenting research findings that support evidence-based principles. In particular, the site covers ongoing research that provides guidelines, prescriptions, rules, conditions, action statements, or advice about what to do in given situations.
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