CFTC Proposes Affiliate Curbs for 6 Prediction Exchanges, Targeting Conflicts of Interest
Updated
Updated · Sportico · Aug 7
CFTC Proposes Affiliate Curbs for 6 Prediction Exchanges, Targeting Conflicts of Interest
3 articles · Updated · Sportico · Aug 7
Summary
At least six prediction exchanges would face new CFTC limits on affiliated trading desks that bet against customers, with comments due by Oct. 5 after the proposal hit the Federal Register on Thursday.
The draft stops short of banning affiliates outright, instead forcing them to quote both sides of markets, take last priority on resting orders, and forgo fee or technology advantages over outside market makers.
Separate staff, software and office space would be required between an exchange and its affiliate, while an independent third party would monitor compliance and report to the CFTC; missing certification would bar the affiliate from trading.
Kalshi, DraftKings and Novig are among firms exposed to the proposal, though DraftKings CEO Jason Robins said the plan looks preliminary and not a major threat to its market-making business.
The rulemaking marks the CFTC's first formal affiliate push since 2023 and reflects post-FTX concern that vertically integrated exchanges can police their own profit centers too loosely.