Via professor Eric Zitzewitz of Dartmouth (one of the top 5 economists studying prediction markets), the CFTC:

Release: 5493-08
For Release: May 1, 2008

CFTC Requests Public Input on Possible Regulation of “Event Contracts”

Washington, DC – The Commodity Futures Trading Commission (CFTC) is asking for public comment on the appropriate regulatory treatment of financial agreements offered by markets commonly referred to as event, prediction, or information markets.

During the past several years, the CFTC has received numerous requests for guidance involving the trading of event contracts. These contracts typically involve financial agreements that are linked to events or measurable outcomes and often serve as information collection vehicles. The contracts are based on a broad spectrum of events, such as the results of presidential elections, world population levels, or economic measures.

“Event markets are rapidly evolving, and growing, presenting a host of difficult policy and legal questions including: What public purpose is served in the oversight of these markets and what differentiates these markets from pure gambling outside the CFTC’s jurisdiction?” said CFTC Acting chairman Walt Lukken. “The CFTC is evaluating how these markets should be regulated with the proper protections in place and I encourage members of the public to provide their views.”

In response to requests for guidance, and to promote regulatory certainty, the CFTC has commenced a comprehensive review of the Commodity Exchange Act’s applicability to event contracts and markets. The CFTC is issuing a Concept Release to solicit the expertise and opinions of all interested parties, including CFTC registrants, legal practitioners, economists, state and federal regulatory authorities, academics, and event market participants.

The Concept Release will be published in the Federal Register shortly- comments will be accepted for 60 days after publication in the Federal Register.

Comments may also be submitted electronically to [email protected]. All comments received will be posted on the CFTC’s website.

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WOW.

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UPDATE: Eric Zitzewitz tells me that comments are sought 60 days after publication in the Federal Register. So, the deadline for commenting will be somewhat around June 30, 2008.

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