Regulation of Prediction Markets in the U.S.

<span>Prediction products in the form of binary options that settle based on the occurrence of discrete events have experienced a rapid expansion on U.S. derivatives exchanges. Once limited to conventional economic variables such as weather or macroeconomic indicators, these products now encompass elections, sporting events, and elements of popular culture. This overview provides an account of the regulatory challenges posed by this expansion, focusing on (a) jurisdictional issues between gambling and derivatives activity, (b) manipulation, and (c) insider trading.</span>