Prediction Markets

Prediction markets have evolved from platforms primarily used for hedging commodity prices to sophisticated venues covering elections, sports, corporate, economic, and geopolitical events. As participation grows, so do the complex transactional, litigation, investigative, and regulatory challenges facing market participants. Sidley offers a fully integrated practice that helps exchanges, trading platforms, financial institutions, and investors navigate the evolving landscape for prediction markets and event contracts.

Our team offers seamless integration across digital assets, derivatives, capital markets, enforcement, and white collar defense, enabling us to address the full lifecycle of prediction market platforms, including fund structuring, registration strategy, compliance, reporting, examinations, and investigations. We have a proven track record advising innovative and high-growth market platforms operating in legally sensitive environments, helping clients anticipate regulatory inflection points and navigate risk with confidence.

We have deep, market-tested experience handling the full spectrum of legal issues, including:

• CFTC, NFA, and commodities SRO registration, product structuring, and ongoing reporting obligations
• Strategic partnerships with exchanges, intermediaries, and financial institutions
• Sponsorship and third-party market access arrangements
• Regulatory and legislative risk assessment and proactive compliance design
• CFTC, SEC, DOJ, and state enforcement defense
• High-stakes litigation and appellate strategy

Prediction markets sit at the intersection of exchanges, clearing systems, intermediaries, data reporting regimes, proprietary trading firms, and retail access platforms. Sidley advises across this entire ecosystem, from regulated financial market infrastructure providers to the institutions and individuals who access and rely on them.

Our clients include:

• Exchanges, clearing organizations, and swap data repositories
• Registered intermediaries, such as swap dealers, futures commission merchants, and introducing brokers
• Active market participants ranging from large proprietary traders to retail platforms serving U.S. and non-U.S. customers
• Many of the top investment management firms, including firms operating at regulatory frontiers

Because we understand how these stakeholders interact under the Commodity Exchange Act and other regulatory regimes, we help clients design market structures, access models, and compliance frameworks that work cohesively, aligning infrastructure, intermediaries, and participants in a way that supports innovation while withstanding regulatory scrutiny. We are actively engaged in helping shape draft legislation governing digital asset markets and serve as trusted counsel to leading investment managers on commodity pool operator/commodity trading advisor (CPO/CTA) status, registration, exemptions, and compliance architecture. We are also actively engaged in helping client navigate enforcement and investigations in the prediction market space.

Our lawyers are at the forefront of prediction markets, regularly delivering insightful and innovative thought leadership to help clients anticipate regulatory developments and evaluate emerging risks. In addition to frequent speaking engagements, news alerts, webinars, and publications, we keep clients abreast of emerging issues through our industry-leading blog, White Collar Watch.

Sidley’s prediction markets team comprises senior lawyers and advisers with firsthand experience at the highest levels of government, providing clients with valuable insight into regulatory, enforcement, and compliance matters. Members of our team include a former Director of Enforcement at the CFTC, a former Chief Corporate Governance Counsel in the SEC’s Division of Corporation Finance, a former Acting United States Attorney for the Southern District of New York, former senior congressional staffers who served on investigative committees conducting major oversight inquiries, and former senior officials from the DOJ and federal regulatory agencies. In their prior roles, our lawyers helped shape regulatory policy, oversee market participants, conduct investigations, and enforce federal securities and commodities laws.