---
type: source
title: "CFTC ANPRM 40-Question Breakdown: Futarchy Governance Markets Absent — Comment Opportunity Before April 30"
author: "Norton Rose Fulbright, Morrison Foerster, WilmerHale, Crowell & Moring, Morgan Lewis (law firm analyses)"
url: https://www.nortonrosefulbright.com/en/knowledge/publications/fed865b0/cftc-advances-regulatory-framework-for-prediction-markets
date: 2026-03-22
domain: internet-finance
secondary_domains: []
format: article
status: processed
priority: high
tags: [cftc, anprm, prediction-markets, regulation, futarchy, governance-markets, comment-period, advocacy, RIN-3038-AF65]
---

## Content

Synthesis of multiple law firm analyses (Norton Rose Fulbright, Morrison Foerster, WilmerHale, Crowell & Moring, Morgan Lewis) of the CFTC ANPRM on prediction markets (RIN 3038-AF65, 91 FR 12516, comment deadline ~April 30, 2026).

The full 40-question structure was reconstructed from these law firm analyses (the Federal Register PDF remains inaccessible via web fetch). Previous archives covered the docket numbers and high-level category structure; this source adds the specific question content.

**Six question categories:**

**Category 1: DCM Core Principles (~Questions 1-12)**
- How should Core Principle 2 (impartial access) apply to prediction markets?
- Are existing manipulation rules appropriate, or do event contracts require bespoke standards?
- What contract resolution criteria and dispute resolution procedures are appropriate?
- What market surveillance and enforcement mechanisms are needed?
- Should position limits apply? How should aggregation work across similar event contracts?
- Should prediction markets be permitted to use margin (departing from fully-collateralized model)?
- How do DCO and SEF core principles apply?
- What swap data reporting requirements apply?
- **Critical: "Are there any considerations specific to blockchain-based prediction markets?"** — only explicit crypto/DeFi question in the entire ANPRM.

**Category 2: Public Interest Determinations — CEA Section 5c(c)(5)(C) (~Questions 13-22)**
- What factors should inform public interest analysis? (price discovery, market integrity, fraud protection, responsible innovation)
- **Should elements of the repealed "economic purpose test" be revived for event contracts?** — directly relevant to futarchy
- For the five prohibited activity categories:
  - Unlawful activity: How resolve federal/state law conflicts?
  - Terrorism: Does cyberterrorism qualify?
  - Assassination
  - War: Distinguish war from civil unrest?
  - **Gaming: (most extensive treatment) Does gaming = gambling? What characteristics distinguish them? What role do participant demographics play? What responsible gaming standards apply?** — key differentiation opportunity for futarchy
- What role do event contracts play in hedging and price risk management?
- What is the relationship between event contracts and insurance contracts?

**Category 3: Procedural Aspects (~Questions 23-28)**
- At what point in the listing process should a public interest determination occur?
- Can the Commission act when a contract application is "reasonably expected but not yet filed"?
- Category-level vs. contract-by-contract determinations?
- What does it mean for an event contract to "involve" one of the listed activities?

**Category 4: Inside Information (~Questions 29-32)**
- Is asymmetric information utility different in prediction markets versus other derivatives?
- Does the answer vary by event type (sports vs. political vs. financial)?
- **How should scenarios where a single individual or small group can control the outcome be handled?** — relevant to small DAO governance where a large token holder can determine outcomes
- What cross-market manipulation risks exist?

**Category 5: Contract Types and Other Issues (~Questions 33-40)**
- How should event contracts be classified as swaps versus futures?
- What idiosyncratic risks differentiate event contracts?
- Does the "excluded commodity" definition apply to event contract underlyings?
- What are cost-benefit considerations?
- What types of event contracts beyond the enumerated categories raise public interest concerns?

**ANPRM structural observations:**
- All 40 questions are framed around sports/entertainment events and CFTC-regulated exchanges
- No mention of futarchy, DAO governance, corporate decision markets, DeFi prediction protocols
- No treatment of decentralized prediction market infrastructure that cannot comply with exchange-licensing requirements
- Complete silence on governance market category

**The comment opportunity map (most impactful question clusters for futarchy):**

1. **Entry point**: Blockchain-based prediction markets question → establish that on-chain governance markets are categorically different from DCM-listed sports events; they cannot seek advance approval because outcomes are determined by token holder participation, not external events.

2. **Economic purpose test revival**: Futarchy governance markets have the strongest economic purpose argument of any event contract category — they ARE the governance mechanism, not merely commentary on external events. Token holders are hedging their actual economic exposure to protocol decisions, not speculating on events they don't influence.

3. **Gaming distinction**: Futarchy governance markets fail every characteristic of gambling — no house, no odds against the bettor, participants have direct economic interest in outcome, outcome affects their actual asset value, and the mechanism serves the corporate governance function recognized by state law. This is the argument the CFTC needs to hear to prevent the default classification from applying.

4. **Inside information / single actor control**: The small-DAO governance context creates a special case — large token holders legitimately have both private information AND economic interests aligned with governance outcomes. The "inside information" framing that applies to sports (referee corruption) doesn't map cleanly to governance markets where participant control is a feature, not a bug.

## Agent Notes

**Why this matters:** The CFTC is building the first regulatory framework for prediction markets without anyone having told them that prediction markets ARE being used as governance mechanisms for $57M+ in assets under futarchy governance (MetaDAO ecosystem). The resulting rule will apply default treatment — probably some version of the gaming classification — unless someone files comments distinguishing the governance category. April 30 is the only near-term opportunity.

**What surprised me:** Five major law firms analyzed the ANPRM in detail and NONE mentioned futarchy, DAO governance markets, or corporate decision-making applications. The legal community tracking this is 100% focused on the sports/entertainment use case. The governance application is invisible to the regulatory conversation.

**What I expected but didn't find:** Any discussion of the distinction between "event contracts that observe external outcomes" and "event contracts that govern internal outcomes." This is the fundamental difference between Kalshi sports markets (passive prediction) and MetaDAO governance markets (active governance). The ANPRM framework doesn't acknowledge the distinction exists.

**KB connections:**
- [[futarchy-governed entities are structurally not securities because prediction market participation replaces the concentrated promoter effort that the Howey test requires]] — the gaming classification track is a SEPARATE regulatory risk from securities classification; the ANPRM silence means no safe harbor from gaming classification even if the Howey defense holds
- [[futarchy solves the trustless joint ownership problem by making conditional token swaps the mechanism for governance participation]] — the specific mechanism of conditional token swaps in governance is categorically different from futures/swaps on external events; this distinction needs to reach the CFTC
- Session 3 research journal: "Express preemption gap in CEA is the structural root cause of all prediction market litigation" — a CFTC comment can't fix preemption, but it can establish that governance markets are a distinct category deserving different analysis

**Extraction hints:**
- CLAIM CANDIDATE: "CFTC ANPRM silence on futarchy governance markets creates default gaming classification risk that active comment filing can mitigate" — time-sensitive; comment deadline April 30, 2026
- ENRICHMENT TARGET: [[futarchy-governed entities are structurally not securities...]] — add ANPRM gaming classification vector as secondary regulatory risk not addressed by the securities analysis
- ADVOCACY FLAG: This is not just a research finding — there's a concrete action available: filing a comment distinguishing governance markets from sports/entertainment event contracts. Flag for Cory decision.

**Context:** The five law firms whose analyses were consulted (NRF, MoFo, WilmerHale, DWT, C&M) are focused on their existing clients (Kalshi, Polymarket, sports prediction platforms). The MetaDAO/futarchy use case has no legal counsel tracking the ANPRM. This is both a gap and an opportunity.

## Curator Notes

PRIMARY CONNECTION: [[futarchy-governed entities are structurally not securities because prediction market participation replaces the concentrated promoter effort that the Howey test requires]]
WHY ARCHIVED: Specific regulatory advocacy opportunity (April 30 comment deadline) with concrete question-by-question entry points for futarchy distinction argument; fills gap in WilmerHale archive's question-level detail
EXTRACTION HINT: Two claims to extract: (1) the ANPRM silence / default risk observation, (2) the specific economic-purpose-test and gaming-distinction arguments available to futarchy governance markets. Time-sensitive — comment deadline April 30, 2026.
