Jan 30, 2026 Over the past 18 months, Turnkey Trading Partners has been deeply engaged in the evolution of the event contract and binary options markets. We have worked with a broad spectrum of participants—including sports betting businesses, large international media organizations, traditional financial institutions, and video game platform providers, amongst others. In every instance these emerging entrants need advice about registration strategy, policy development, risk management frameworks, and NFA platform and general business demonstrations. At each step Turnkey has worked in close coordination with each customer’s respective legal and technology teams to find a pathway to success with regulators. It is an evolving battle to help navigate regulatory uncertainty, anticipate examiner inquiries, and to pursue defensible, workable outcomes in a market where precedent is still being established. Event Contracts and the Regulatory Landscape Event contracts—derivatives tied to the outcomes of future events, from elections to economic indicators—are rapidly evolving in the U.S. regulatory space. Companies like Kalshi and Polymarket have faced lawsuits from state and tribal gaming authorities, highlighting the complex intersection of federal oversight and state-level enforcement. For firms entering this space, understanding the boundaries of CFTC oversight and regulatory scrutiny is critical to building an operationally sound business model and customer facing platform. The central challenge is the collision between market structure and regulatory reality. While Designated Contract Markets (DCMs) are increasingly encouraging firms to pursue direct-to-DCM models, industry regulations have not caught up to these efforts. As of the date of this article there remains no established framework at NFA for its applicant review teams to refer to. This adds complexity for regulators that Turnkey must assist its customers in navigating. Industry regulators continue to grapple with fundamental questions around money flows, anti-money laundering and KYC issues, fund custodianship and accounting, risk management and control obligations as it pertains to customer funds protections, registration obligations for APs when many firms don’t use traditional brokers, and whether or not business models may trigger FCM registration requirements. Similarly, many of the more popular event contracts being offered are viewed as swaps and not futures. This adds a host of regulatory considerations as swaps are not typically offered to retail market participants and have classically been institutional products. Current Regulatory Context: A New Era at the CFTC Another fundamental change that has occurred in the past year is that, the CFTC is undergoing a philosophical shift. In a recent Washington Post opinion, Chairman Mike Selig described a “new era” in which regulators adapt to innovation rather than applying legacy enforcement approaches to emerging markets. Selig calls for modernized, fit-for-purpose rules for novel products and platforms enabled by technology, moving away from enforcement-driven regulation toward frameworks that facilitate growth while protecting markets. This shift is making it more difficult to anticipate what regulators may expect for both established industry participants and new industry registrants. The CFTC’s New perspective brings to the forefront several critical considerations: Regulatory clarity matters: Without rules that reflect economic and operational realities, firms operate in ambiguity. This further highlights the importance of disciplined compliance programs and documentation consistent with traditional expectations. Tailored oversight is underway: The CFTC recognizes that decades-old regulatory structures were not designed for 24/7 digital markets, prediction platforms, or hybrid custody models. Without appropriate guidance and new regulations, innovation within the United States financial markets will very likely be stymied or at the least stunted. Innovation and compliance must coexist: Even as regulators emphasize enabling innovation, they demand operational integrity and robust customer protections. Turnkey is observing NFA asking for more and more demonstrations of business models and platforms. Regulators are taking note of what they are seeing and seemingly building opinions about what is appropriate or what will work best sometimes on the fly. How to Succeed – Choosing Your Operational Model Before applying for CFTC registration and NFA membership, firms must decide upon an operational model. This choice will drive all subsequent staffing, tech, policies, and funding decisions. Presently there seems to be four primary models being utilized by the event contract space: Introducing Broker (IB) Direct-to-DCM Model: Launching directly on a DCM can be challenging. Platforms must build infrastructure, compliance programs, and procedures from scratch, anticipating examiner expectations in an uncharted regulatory environment. Although this path is complex and resource-intensive, it can be done—we are actively helping several firms navigate it successfully. Turnkey supports clients through every step—from registration strategy to operational readiness. Introducing Broker to FCM Model: Partnering with an existing FCM that already has the infrastructure to deal in event contracts. This route may reduce operational overhead while maintaining market access. Turnkey helps draft agreements, design workflows, and prepare the policies needed for smooth regulatory review. FCM (Futures Commission Merchant) Model: Some firms choose to become an FCM to custody customer assets directly. This model requires robust net capital, reconciliations, and full operational infrastructure, but it allows complete control over funds and positions. While more resource-intensive, it provides flexibility for custom platform designs and can support both proprietary trading and customer-facing contracts under full CFTC oversight. Hybrid Model: some event contract participants already have working models and platforms in place. These firms may have the infrastructure, licenses, and regulatory capability to hold customer assets without being registered with the CFTC. Under these circumstances a hybrid model can be explored whereby the custody of assets and CFTC oversight may be able to co-exist without a full FCM license. These models are highly complex and require a great deal of legal and compliance expertise. Choosing the right model first ensures that all subsequent design decisions—technology, staffing, policies, and funding—are aligned and defensible. How Turnkey Makes It Work Once the operational model is chosen, firms need to build the infrastructure and safeguards to operate safely and satisfy regulators: Proper Company Setup with Counsel: Legal structure, governance, registration pathways, and senior-level personnel are foundational. Regulators expect accountability and expertise at the top. Policies and Procedures: Robust NFA-compliant policies covering communications, customer onboarding, AML/KYC, trade reviews, and conflicts of interest serve as operational guides and regulatory evidence. Risk Management Program: Formal programs identify, mitigate, and monitor operational, financial, and compliance risks. Technology safeguards and redundancy measures catch or mitigate errors. NFA also expects detailed analysis of the event contract landscape, particularly as it pertains to sports contracts. This is the result of the CFTC’s Staff Advisory 25-36 from September 30, 2025. In fact, showcasing how fast the space is evolving, just today (January 30, 2026) the CFTC changed direction on event contracts again promising a framework for regulation is coming soon. Staffing and Operational Capacity: Regulators expect senior personnel, competent counsel, and enough staff for redundancy and continuous oversight. Although many event contract businesses are automated via software, traditional finance expectations are that human beings will be available in appropriate roles once a firm is registered. These roles can’t always be automated away. Customer Statements, Financial Reconciliation, and Funding: Firms must provide clear, timely statements, fully reconciled ledgers, and maintain adequate net capital to support operations. Point balancing of funds should occur daily and be demonstrable to regulators. Ongoing Regulatory Alignment: Continuous compliance—including reporting, policy updates, and exam preparation—demonstrates credibility to regulators and intermediaries. Market surveillance for manipulation, regular reviews, and internal control processes will be of increasing importance as the space evolves. By systematically addressing these areas, firms can enter the event contract space with confidence, operational readiness, and structures capable of withstanding scrutiny. If your firm is ready to enter the event contract space, please give Turnkey a call at 312-324-0040 or contact us at info@turnkeytradingpartners.com. Turnkey Trading Partners is one of the nations leading consulting firms when it comes to CFTC registered binary option and event contract business models. Let’s talk today to learn more about your project and how we might be able to help!