Davis Polk partner Gabe Rosenberg was quoted in The Information discussing prediction market regulation amid the increasing popularity of users betting on company valuations and IPO timelines.

The article highlighted that, as prediction market contracts get closer to stock-like bets, the higher the change the SEC will want to regulate them.

“Event contracts offered in the U.S. that directly reference securities and related information would trigger the SEC’s jurisdiction and can only be offered to retail investors on national securities exchanges such as the NYSE,” Gabe explained.

The article also noted that there is a more of a gray area around bets tied to events that could affect a company’s financial performance. If these contracts start to look too much like stock wagers, they could fall under the SEC’s authority, which could pose a challenge for prediction markets currently operating under the CFTC.

Gabe said, “A lot depends on where that line is.” He added that the CFTC and the SEC will need to come to an agreement on what types of contracts fall under which regulator and provide specific guidance to prediction markets.

“Pre-IPO Betting Boom Hits Prediction Markets,” The Information (May 27, 2026) (subscription required)

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