Rich by Coin

Milbank, the law firm defending Kalshi in ongoing court battles, offered a behind-the-scenes look at recent CFTC prediction market guidance and what it means for exchanges. The law firm Milbank hosted “The CFTC’s New Guidance on Prediction Markets: What You Need to Know” on Tuesday, following the CFTC’s release of a regulatory expectations advisory and an Advanced Notice of Proposed Rulemaking. The rulemaking process begins with a 45-day public comment period, ending April 30.

Milbank Partner Josh Sterling opened the session by highlighting the explosive growth of prediction markets, which have gone from $3 billion in trading volume in January 2025 to $27 billion in January 2026. He noted that the expansion has drawn attention from those seeking to revitalize financial markets and infrastructure, as well as from courts and state regulators. Sterling’s remarks set the stage for a discussion of how the new guidance could affect operators.

Laroche explained that the advisory signals the CFTC’s view that sports event contracts fall under its jurisdiction. “We find that very helpful,” he said, adding that the advisory indicates the CFTC recognizes prediction markets as a unique financial asset class that is rapidly growing and informative for a range of uses. The notice also reinforces anti-manipulation obligations and insider trading restrictions under the Commodities Exchange Act. Sterling added that the agency already employs traditional tools of market discipline to police wrongdoing.

Williams characterized the notice of rulemaking as an important statement of jurisdiction, while acknowledging it provides fewer specifics about the rule’s direction. The notice poses broad questions about how prediction markets should fit into the current regulatory framework and whether new rules are needed. It also invites input on how event contracts could assist hedging, price risk management, price discovery, and information dissemination. In parallel, Milbank offered practical tips for operators, including evaluating contract listings, forming information-sharing arrangements with leagues, assessing manipulation risks, commenting during the rulemaking, and monitoring blockchain developments.

Mainland outlined more than 20 ongoing court cases related to prediction markets, and noted a new criminal suit filed Tuesday against Kalshi by Arizona Attorney General Kris Mayes. He said Milbank believes the core question is whether the CEA preempts state law where designated contract markets are involved, arguing the CFTC has exclusive jurisdiction. He added that Congress created the CFTC to centralize regulatory authority over these markets, and that there is a long history of state efforts to regulate derivative markets as gambling.