WEBVTT

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Why are prediction markets
attracting billions in volume

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and what comes next?

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Prediction markets,
which are platforms

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where participants
trade contracts tied

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to the outcome of real world
events, have crossed

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from academic curiosity
into regulated finance.

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Today, over 3000

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event contracts are listed on
CFTC regulated exchanges.

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A huge jump from

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five contracts per year
between 2006 and 2020.

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Sources project annual trading
volume could hit $240 billion

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this year,
and $1 trillion by 2030.

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Prediction markets are not

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a niche development,
but a new asset class,

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and the rules
that will govern them

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for the next decade
are being written right now.

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The CFTC has staked
its claim as the exclusive

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federal regulator
of prediction markets.

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Under the CFTC’s
new chairman, Michael Selig,

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the agency’s posture

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has shifted dramatically
from restrictive to enabling.

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In March, Chairman Selig

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launched a formal
rulemaking process

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that will define the future
of event contracts.

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The CFTC has also named

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insider trading in
prediction markets

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a top enforcement priority,

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with recent
enforcement actions

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already making headlines.

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Amid these regulatory changes,
companies that engage early,

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build compliance infrastructure,

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and proactively structure
their businesses will be best

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positioned to scale in
this fast-moving environment.

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While sports betting litigation
has garnered much attention,

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real transformative
opportunities lie in what

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prediction markets
offer to the broader markets.

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For instance, prediction
markets are a mechanism

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for retail investors to access
financial instruments

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historically available
only to institutions.

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And because
prediction markets turn

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dispersed judgments
into numerical probabilities

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investors can use this data
to make dynamic

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hedging and investment
strategies in real time.

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As liquidity in the markets

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and real-time market
information continue to deepen

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this new data
layer will inform new

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and existing
financial markets.

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Institutional participants
or funds

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entering prediction markets
need to consider

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relevant regulatory licensing,

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structuring, and
trade agreements.

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Given the legal complexity
of prediction markets,

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establishing the right legal

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and operational structures
early matters.

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At Latham, we advise

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platforms, institutional
participants, funds,

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and DeFi protocols

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across the full prediction
market lifecycle -

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from CFTC licensing
and compliance design

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to capital raises, M&A,
and corporate strategy.

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I’m a Yvette Valdez,

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Co-Chair of Latham’s

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Digital Assets
and Web3 Practice.

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With more than two decades
in derivatives regulation,

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I help clients

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navigate prediction markets,

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digital assets,
and the financial

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infrastructure
being built around them.