NFA and CFTC registration for prediction markets: who registers what, with whom

The question in the old title, NFA or CFTC, has a short answer: both, for different things. Exchanges and clearinghouses are registered by the Commodity Futures Trading Commission itself. Brokers, advisers, fund operators and their salespeople register under the Commodity Exchange Act with the CFTC, but the filing and the background review run through the National Futures Association, and most of those firms must also join it and follow its rules. On top of both sits a question federal registration does not settle: whether a state may apply its gambling law to a sports event contract. As of September 30, 2026, the federal courts of appeals answer that question differently.

This guide is for founders, operators and vendors across the prediction-market stack. It sets out each federal registration category in the statute’s and the regulator’s own words, how an event contract gets listed, what the CFTC is changing, and where the state litigation stands.

Two bodies, one registration system

The CFTC is the federal agency. The NFA is the industry’s self-regulatory organization, registered with the CFTC as a “registered futures association” under section 17 of the Act (7 U.S.C. § 21). The NFA’s own page describes the division of labour in three sentences:

The delegation is written into the CFTC’s rules:

The statute that authorizes the delegation also marks where it stops. Exchanges and clearinghouses are not handed to the NFA:

Membership follows registration. The CFTC requires each registered futures commission merchant to become and remain an NFA Member (17 C.F.R. § 170.15, which excepts FCMs registered by notice under Rule 3.10(a)(3)), and does the same for the other intermediary categories, with one carve-out for a narrow class of advisers:

The registration map

Each category below is triggered by an activity, not by a label. The table pairs the activity in the statute with where the registration is filed and whether NFA membership follows.

A company that only supplies data, software, identity checks, geolocation or payment rails does not appear in these definitions as written: each turns on running a venue or clearing, taking orders, holding customer money, advising, or pooling. A white-label front end that takes orders, or a referral arrangement paid per trade, sits closer to the introducing-broker definition than a data feed does.

Layer 1: the venue and the clearinghouse

The first constraint on any retail prediction market is a single sentence of the Act. Event contracts listed by these exchanges are often structured as swaps, and the Act limits who may enter into a swap off an exchange:

A DCM is designated by the CFTC on application under 7 U.S.C. § 7, and to keep its designation it must comply with the statutory core principles and the CFTC’s rules under them (§ 7(d)(1)). The CFTC’s market oversight staff restated the scale of that obligation in a March 2026 advisory addressed to every DCM:

Clearing is a separate registration. A derivatives clearing organization must be registered with the CFTC before it clears futures, options or swaps (7 U.S.C. § 7a-1(a)), and its own core principles apply. The exchanges that serve retail customers pair the two functions. Kalshi’s rulebook defines its “Clearing House” as any clearing house registered with the CFTC as a DCO that the exchange designates, and Polymarket US’s participant agreement is entered into by QCX LLC (Polymarket US) and QC Clearing LLC (Polymarket Clearing) together. Kalshi’s rulebook also shows how the venue meets the intermediaries: its Members are FCMs, IBs and self-clearing members, and the rulebook sets the registration each must hold.

Layer 2: listing a contract under Part 40

A designated exchange does not wait for the CFTC to approve each new contract. Under Part 40 of the CFTC’s rules it can self-certify the product and list it the next business day:

The alternative is to ask first. Rule 40.3 lets a DCM, SEF or DCO request Commission approval before listing, with a 45-day review that the CFTC can extend by up to another 45 days. Self-certification places the legal judgment on the exchange; the CFTC can stay a listing during proceedings for a false certification (Rule 40.2(c)).

Event contracts carry one more federal rule. Congress gave the CFTC authority to bar event contracts in named categories, and the CFTC implemented it in Rule 40.11:

The 2026 rulemaking, in order

The CFTC has acted on event contracts four times this year, each step published in the Federal Register:

1. February 6, 2026: the Commission formally withdrew its June 10, 2024 “Event Contracts” proposal, effective February 4, and said it does not intend to finalize it (91 Fed. Reg. 5386).
2. March 12, 2026: Division of Market Oversight staff issued Letter No. 26-08, the advisory to DCMs quoted above. It is staff guidance, not a rule.
3. March 16, 2026: an advance notice of proposed rulemaking on prediction markets asked for comment on the core principles, the categories of contracts that may be barred as contrary to the public interest, and costs and benefits; comments closed April 30 (91 Fed. Reg. 12516).
4. June 12, 2026: a proposed rule would rewrite Rule 40.11 with factors for public-interest determinations, a definition of “gaming”, and a rule on when a contract “involves” an activity; comments closed July 27 (91 Fed. Reg. 35806). A separate July 1 proposal addresses data reporting for certain event contracts (91 Fed. Reg. 40102).

No final rule on either proposal appears in the Federal Register as of September 30, 2026. Until one does, the 2011 text of Rule 40.11 governs listings.

Layer 3: brokers and their salespeople (FCM, IB, AP)

Two businesses can stand between a customer and an exchange, and the line between them is customer money. The Act makes each registration a condition of doing business:

The two carry different capital floors. An FCM must hold adjusted net capital of at least $1,000,000 or its risk-based requirement, whichever is greater; an IB’s floor is lower, and an IB that operates under a guarantee from an FCM meets the requirement through the guarantee:

Exchanges write the same registrations into their membership rules. Kalshi’s rulebook admits introducing brokers on these terms:

Robinhood uses the FCM model. Its help page names the registered entity that offers the product and the exchanges it routes to:

Every registered FCM, IB, CTA and CPO also registers the people who sell for it. The Act makes it unlawful to be associated with an FCM or IB in a capacity that involves soliciting or accepting customers’ orders, or supervising those who do, without registration as an associated person (7 U.S.C. § 6k(1)), and the CFTC’s rule requires the firm, as sponsor, to certify the applicant’s Form 8-R (17 C.F.R. § 3.12(c)). Proficiency is the NFA’s requirement:

Layer 4: advisers and pools (CTA, CPO)

Newsletters, model signals, copy-trading tools and funds do not touch orders, but the Act reaches the ones that advise for pay or pool other people’s money:

Whether a product is “advice” turns on the statutory definition and its exclusions. The definition covers anyone who, for compensation or profit, advises others “either directly or through publications, writings, or electronic media” on the value or advisability of trading a futures contract or swap, and it carves out several groups:

The CFTC’s exemptions for advisers are in Rule 4.14. Three are relevant here, and the numbering matters:

• Rule 4.14(a)(10) is the regulation’s version of the statutory 15-person exemption: no more than 15 persons advised in the preceding 12 months, and no holding out to the public as a CTA. The rule sets out how related persons and accounts are counted as a single person.
• Rule 4.14(a)(9) exempts an adviser that neither directs client accounts nor gives advice based on, or tailored to, the positions or circumstances of particular clients. It is the exemption that also lifts the NFA membership requirement in Rule 170.17.
• Rule 4.14(a)(8) is a different exemption altogether: it is for registered or exempt investment advisers whose commodity advice is directed solely to specified kinds of funds and pools, and it is claimed by notice. It is not a small-adviser exemption.

A fund that trades event contracts with investors’ money is a commodity pool, and its operator registers unless an exemption in Rule 4.13 (or the Rule 4.5 exclusion) applies. The small-pool exemption has two limits:

The other two commonly used CPO exemptions have different conditions. Rule 4.13(a)(1) covers an operator that takes no compensation beyond expense reimbursement, runs one pool at a time, is not otherwise required to register and does not advertise. Rule 4.13(a)(3) covers private pools offered to accredited investors, qualified eligible persons and similar participants whose commodity-interest trading stays within a de minimis test: initial margin and premiums of no more than 5 percent of the pool’s liquidation value, or aggregate net notional value of no more than 100 percent of it. A registered CPO, for its part, files each pool’s Disclosure Document with the NFA at least 21 calendar days before first delivering it to a prospective participant (Rule 4.26(d)(1)).

Layer 5: the state overlay and the litigation

Registration answers the federal question. It does not answer whether a state may treat a sports event contract on a DCM as an unlicensed sports wager. The operators’ position is that the Act gives the CFTC exclusive jurisdiction over swaps traded on a DCM, which displaces state gambling law. The CFTC’s consumer page states the agency’s own view in one line:

The Third Circuit agreed with the operators in April:

The Ninth Circuit, in Nevada’s case, held the opposite on the first step and relied on Rule 40.11:

The Sixth Circuit decided the Ohio and Tennessee appeals together on September 25, and answered both questions for the states:

Every one of these rulings is preliminary; none is a final judgment on the merits. The Supreme Court docket shows New Jersey’s petition filed on September 2, the response deadline extended to November 9, 2026, and an amicus brief from the National Council of Legislators from Gaming States filed on September 22. The Court has not acted on the petition.

What the overlay means for vendors

The earlier version of this guide said that most gaming states require prediction-market technology vendors to hold a gaming supplier license. The sources read for this guide do not support a statement that broad, and it has been removed. What the record does show is a state gaming regulator treating partnerships with event-contract offerors as a licensing question for its own licensees:

The earlier version also cited California’s AB 831 as extending criminal liability to payment processors and geolocation providers serving prediction markets. AB 831 does name payment processors, geolocation providers, gaming content suppliers, platform providers and media affiliates, but the conduct it reaches is knowingly and willfully supporting an “online sweepstakes game” as the statute defines it, a dual-currency sweepstakes model. It does not address event contracts on a DCM.

Worked examples: who registers what

• An exchange listing event contracts to the public: DCM designation from the CFTC, a registered DCO (its own or another’s) for clearing, and Part 40 filings for every contract, tested against Rule 40.11.
• A broker app that holds customers’ money and routes their orders to one or more exchanges: FCM registration, NFA membership, at least $1,000,000 in adjusted net capital or the risk-based figure if higher, segregated customer funds, a chief compliance officer, and AP registration for sales and supervisory staff. Each exchange’s membership rules apply on top.
• A front end that takes orders but never touches customer money: IB registration and NFA membership, either independent with its own $45,000 floor or guaranteed by an FCM, plus APs for the people who solicit.
• A paid signal service, newsletter or copy-trading product recommending specific event-contract positions: the CTA definition applies unless an exclusion or a Rule 4.14 exemption fits. A public product that markets itself as trading advice does not meet the “does not hold itself out” condition of the 15-person exemption.
• A fund or on-chain vault that trades event contracts with investors’ money: CPO registration, or a Rule 4.13 exemption claimed by notice filed with the NFA and affirmed each year.
• A data, KYC, geolocation or payments vendor that does not solicit or accept orders, hold customer money, advise or pool: none of the federal categories above, as defined. Its state exposure runs through its customers and through any gaming license it already holds.

What a builder does with this

1. Map your activity to the statutory triggers, not to a product label: running a venue, clearing, taking orders, holding customer money, advising for pay, or pooling. Each one points to a category in the table above.
2. If you claim an exemption, file it where the rule requires (Rule 4.13 notices go to the NFA), affirm it annually, and re-test the conditions as you grow: 15 persons, 15 participants, $400,000, and the 4.13(a)(3) trading limits.
3. If you design contracts, design to Rule 40.11 as it stands, Staff Letter 26-08, and the factors in the June 2026 proposal, and re-read them when a final rule issues.
4. Build state eligibility into the product from day one. At the preliminary-injunction stage, the Sixth and Ninth Circuits have declined to stop states from applying their gambling laws to sports contracts, the Third Circuit has stopped New Jersey, and a certiorari petition asks the Supreme Court to decide the question. Exchanges and FCMs already screen by state; vendors’ contracts need the same flexibility.
5. If you hold any gaming license, read your regulator’s position on event-contract partnerships before you sign one.