SEC Repeatedly Delays Approval of Prediction Market ETFs
The U.S. Securities and Exchange Commission (SEC) has recently postponed the listing approval for over 20 prediction market exchange-traded funds (ETFs) submitted by firms such as Roundhill Investments, GraniteShares, and Bitwise. These ETFs were originally scheduled to automatically become effective around May 4, 2026, but were subsequently delayed again on May 11 and September 20. On May 21, SEC Chairman Paul S. Atkins stated that these "novel products present novel questions" and requested issuers to delay effectiveness for the Commission's deliberation. On June 30, the SEC officially launched a 60-day public comment period, explicitly including prediction market ETFs in the discussion.
These ETF issuers aim to track binary event contracts on CFTC-regulated prediction markets (such as Kalshi and Polymarket) through derivatives, covering a wide range of areas including elections, recessions, tech layoffs, and crude oil prices. The SEC's primary concerns regarding such products include their product mechanisms, risk disclosures, valuation uncertainties, settlement disputes, and ambiguity in event definitions. The SEC believes investors may face the risk of losing most of their principal and is weighing the scope of applicability for ETFs as an investment vehicle. Bloomberg ETF analyst Eric Balchunas considers these products "groundbreaking," suggesting regulators may be cautious due to the precedents they would set. Investors can follow the latest approval updates and market developments for these ETFs on platforms like Svmuu.
CFTC and NHL Join Forces to Enhance Market Integrity
In contrast to the SEC's cautious approach, the U.S. Commodity Futures Trading Commission (CFTC) is actively promoting cooperation with professional sports leagues. On May 21, 2026, the CFTC signed a Memorandum of Understanding (MOU) with the National Hockey League (NHL), which was executed on May 18. This MOU aims to establish a framework for information sharing and cooperation to protect the integrity of professional ice hockey and ensure fairness and transparency in event contract markets traded on CFTC-regulated exchanges.
The agreement was signed by CFTC Chairman Michael S. Selig and NHL Commissioner Gary Bettman. Previously, the NHL had signed multi-year commercial partnership agreements with prediction market platforms Kalshi and Polymarket in October 2025, allowing these platforms to use the NHL's official data and logos. The CFTC also signed a similar agreement with Major League Baseball (MLB) in March 2026. The CFTC is committed to safeguarding sports integrity and protecting market participants from insider trading, fraud, and other abusive practices. The NHL emphasizes the importance of integrity for fan and partner trust, believing the agreement enhances existing monitoring systems and strengthens the ability to identify, deter, and resolve potential risks. Notably, the MOU is not legally binding and focuses more on establishing an informal information-sharing partnership.
The Long Road to Prediction Market Compliance
Prediction markets are legal at the federal level in the U.S. through CFTC-licensed Designated Contract Markets (DCMs), with the CFTC regulating their event contracts as financial derivatives. However, the path to compliance is not smooth, especially facing complex challenges at the state law level. Between 2025 and 2026, over ten states challenged, restricted, or sued prediction market operators, and courts are divided on whether federal law preempts state gambling regulations.
In terms of legislative progress, in September 2026, the U.S. Senate failed to pass the Digital Asset Market Clarity Act (CLARITY Act), which aimed to clarify the boundaries between SEC and CFTC in digital asset regulation. This marked a significant setback for efforts to establish a comprehensive federal digital asset framework. Nevertheless, the CFTC is actively taking action, for example, issuing a no-action letter on May 13, 2026, exempting some event contract platforms from swap data reporting and record-keeping compliance burdens, and filing an amicus curiae brief on May 12, supporting Kalshi in its dispute with Ohio against the state's overreach regarding federally regulated event contracts. The SEC also proposed new "crypto asset regulation" rules on August 18, 2026, aiming to create a tailored issuance regime for certain investment contracts involving digital assets.
Currently, jurisdictional disputes still exist between regulatory bodies (SEC/CFTC), with the SEC tending to view certain digital assets as securities, while the CFTC treats event contracts as commodities. Although both parties stated in September 2025 that they would coordinate regulatory approaches, the lack of a unified federal digital asset regulatory framework has led to increased compliance costs, hindered innovation, state-federal conflicts, market integrity concerns (such as insider trading and market manipulation), AML/KYC compliance complexities, and ambiguous tax guidance for the industry.
Looking ahead, despite slow legislative progress, the regulatory framework is evolving towards clearer divisions of responsibility. The CFTC is expected to continue allowing futures exchanges to list novel contracts, including digital asset derivatives and event contracts. For the industry, strengthening governance and compliance frameworks, rather than passively awaiting legislation, will be key to promoting the healthy development of prediction markets.
