Most people who open a prediction market account arrive from somewhere else. A video, a comparison page, a bonus code, a wallet app with a trading tab. Someone was paid for that arrival, and the payment is usually booked as marketing spend. Whether it is marketing spend or the compensation of an unregistered intermediary is a question of federal law, and the answer does not depend on which budget line it came out of. We traced that distribution layer end to end in a piece on the first screen a trader sees and left the registration question open on purpose, because naming who must register without a documented basis would have been guesswork. The basis exists. This is it, as of 23 October 2026.
The regulation adds a compensation test the statute does not have
Start with the two definitions, because they are not identical. Section 1a(31) of the Commodity Exchange Act, at 7 U.S.C. 1a(31), defines an introducing broker as any person engaged in soliciting or in accepting orders for a commodity for future delivery, a security futures product or a swap, who does not take customer money to margin those trades. There is no mention of being paid. The Commission's own regulation at 17 CFR 1.3 defines the same term as any person who, for compensation or profit, whether direct or indirect, is engaged in soliciting or in accepting such orders other than in a clerical capacity.
That inserted phrase does a lot of work. A fan who posts a link and is paid nothing is outside the regulatory definition. A partner on a revenue share, a per account bounty or a per trade rebate is inside the test, and the words whether direct or indirect mean that routing the money through an agency or a holding company does not move it back out. The consequence sits in section 4d(g) of the Act, at 7 U.S.C. 6d(g), which makes it unlawful for any person to be an introducing broker without being registered as one. Registration is not a licence the partner chooses to seek. It is a prohibition on the activity without it.
The Commission answered the referral fee in a 1983 release
The obvious objection is that an affiliate does not accept orders. Nobody clicks buy inside a comparison page. The Commission dealt with that objection when it built the registration category in the first place. In the 1983 adopting release for introducing broker registration, published at 48 FR 35248, 35250 on 3 August 1983, the Commodity Futures Trading Commission wrote that the phrase soliciting or accepting orders cannot be read literally, that it reaches the solicitation of customers for referral to a futures commission merchant for the institution of a trading relationship, and that a person paid on a per trade basis or by a referral fee is treated as the agent of that firm for the acceptance of the resulting orders. Its conclusion was that such a person would be "within the definition of, and generally required to register as, an introducing broker."
That release is not online in full, which is why it is worth knowing where the Commission has since reproduced it. The passage is quoted at length in footnote 11 of CFTC Letter 26-25, issued by the Market Participants Division on 17 September 2026, and the same construction is quoted in CFTC Letter 04-34 of 16 September 2004. Forty three years apart, the agency cites itself for the same proposition. Anyone who tells you the referral question is novel has not read either letter.
For two decades the line was six representations long
Between those two dates the staff worked out where the boundary actually fell, and it did so through a series of letters to technology vendors. Letter 04-34 is the readable example. A software company marketed an order entry front end, took a flat monthly fee from its own customers, and asked whether it had to register. The Division of Clearing and Intermediary Oversight said no, and the reasoning is the useful part. The company did not recommend, propose or encourage any particular broker, the letter notes, even in response to a customer inquiry, and its fee bore no relation to the commissions the executing firm charged.
Letter 26-25 collects the conditions from that whole line of letters into one list of six. Each customer had a relationship with a broker that existed independently of the vendor. The vendor never recommended a particular broker, even on request. The platform produced no express buy or sell signals. The vendor neither solicited nor accepted orders. Its fees were unrelated to the fees the broker charged for execution. And it held no trading privileges on an exchange. Read that list against a modern partner programme and the answer falls out immediately. A partner that exists to send users to one named venue, and is paid according to what those users then do, fails at least three of the six. On the standard that governed from 2004 until the autumn of 2026, it was an introducing broker.
On 17 September 2026 the staff moved the line and named event contracts
Letter 26-25 does not restate that standard. It relieves people from it. The Market Participants Division said it will not recommend an enforcement action against a passive software provider for failing to register as an introducing broker, or against its personnel for failing to register as associated persons, so long as ten conditions hold. The letter generalises relief first given to a single company in CFTC Letter 26-09 of 17 March 2026, addressed to Phantom Technologies.
Two details in the covered activities matter to this category more than anything else written about intermediation this year. The first is the product list. The relief covers software through which users submit orders for Commission regulated derivatives "including event contracts, perpetual contracts, and other Commission-regulated derivatives." This is not a futures era document that happens to read across. It names our instruments. The second is the conduct. The provider may market its relationships with named exchanges and brokers, may promote the availability of particular contracts, and may solicit users to engage with specific ones, provided those users face no contractual or operational barrier to reaching the venue directly. The venue may also share a specified portion of its revenues with the provider.
So a paid partner may solicit for a named venue on a revenue share and stay unregistered. That reads like a win for the growth team until you see what the agency calls the conduct. Letter 26-09 describes the activities it relieves as activities that constitute introducing broker activity requiring registration. Relief is not a finding that this was marketing all along. It is a decision not to recommend charges against a business that keeps a specific set of promises.
Ten conditions, and most of them are promises to the user
The conditions read as a product specification rather than as compliance trivia, because an operator who wanted to behave well would have written most of them unprompted. The provider and its principals must be free of statutory disqualification. Each user must receive, and acknowledge receiving, disclosures about the provider's relationship with the venue and the conflicts of interest in it, fees expressly included, plus a risk disclosure addressing the risks in the statement at 17 CFR 1.55(b) unless a registered firm in the chain already owes one. Users must be onboarded as direct members of the exchange or customers of a registered broker, and must keep the ability to reach that firm without the provider in the way.
Then the marketing conditions, which are the sharpest. The provider must adopt and enforce policies designed to comply with Commission and National Futures Association rules on communications with the public as if it were registered, including NFA Compliance Rule 2-29. And it must not run advertising or promotions that would require NFA pre-approval if it were registered. Finally the paperwork. The provider and each venue must sign an undertaking accepting joint and several liability for the provider's violations and consenting to Commission jurisdiction, and that undertaking is filed with the Division, as is a notice agreeing to the conditions. Records follow 17 CFR 1.31.
Read the fee disclosure condition next to Directive 02 of our manifest, which asks that conflicts of interest be stated in plain language on the surface where the trade happens. The staff letter asks for an acknowledged disclosure at onboarding. The directive asks for it at the moment of the trade. The letter is the floor, and it is a lower floor than the one we are asking people to sign.
The relief is for people who build software, not for people who sell attention
Here is the limit that most summaries of Letter 26-25 miss. The relief runs to passive software providers. The covered activities begin with developing and distributing a front end interface through which the user transmits orders directly, and the letter is explicit that the provider never holds user assets, never generates buy or sell signals, and never exercises discretion over routing or execution. A content partner who posts a link, a bonus code and a screenshot builds no interface and transmits no orders. It cannot file a notice under this letter, because it is not the kind of business the letter describes.
For that partner the law is the 1983 construction, the compensation test in 17 CFR 1.3, and the prohibition in 7 U.S.C. 6d(g). The exposure is not theoretical. On 12 August 2024 the Commodity Futures Trading Commission announced in release 8941-24 that Cost Management Solutions, a Texas company, would pay a civil monetary penalty of 100,000 dollars and cease and desist, on a finding that it had acted as an unregistered introducing broker by soliciting and accepting orders for swap and options transactions for clients while taking fees for the service. Different industry, same provision, and a number attached.
The self regulator wants the answer in writing and cannot reach the exchange
There is a second system that already forces someone to write the answer down, and it is not the Commission. NFA Bylaw 1101, last amended with effect from 1 August 2016, prohibits a Member of the National Futures Association from carrying an account, accepting an order or handling a transaction for a non Member that is required to be registered with the Commission as a futures commission merchant, introducing broker, commodity pool operator, commodity trading advisor or leverage transaction merchant. The association's Interpretive Notice 9007, revised 1 July 2000, says the bylaw imposes strict liability in terms, while staff in practice recommends complaints where the evidence shows the Member "knew or should have known" of the violation. Diligence is therefore the defence, and the notice lists the minimum steps that constitute it.
The referral case has its own sentence. Interpretive Notice 9055, adopted 19 August 2004 and last amended with effect from 1 January 2020, says that a third party, and it widens this to any third party, may be required to register as an introducing broker "if it refers customers to an NFA Member and receives compensation for the referrals." It then prescribes the mechanism. Where it appears that registration may be required, the Member should ask the third party for a letter from counsel stating the reasons why it is not. Absent that letter, the Member should ask the third party to register. If it will not, the Member should end the relationship.
That is a real standard, and it has a hole in this category. Bylaw 1101 binds Members of the association, and the categories that trigger mandatory membership are the registrant categories the bylaw itself lists, which the association summarises on its mandatory membership page as futures commission merchants, introducing brokers, commodity pool operators and commodity trading advisors. An exchange is not one of them. In the direct access model that most prediction market venues run, where the user is a member of the exchange and no broker stands in between, there is no association Member anywhere in the relationship. Nobody is required to collect the counsel letter, so nobody does.
Both October documents define the instrument and skip the seller
This gap sits underneath the most important definitional work the category has seen. On 19 October 2026 the Commission published two documents on the same day. The interim final rule at 2026-21376 excludes casino style gambling products from the swap definition, and the proposal at 2026-21377 would include event contracts in it, with comments due by 18 November 2026. We read both in full when they appeared and set out the five differences the Commission relies on.
Searched for the distribution layer, both documents are silent. Across roughly 12,200 words each, the words affiliate, referral, marketing and intermediary do not appear at all. The term introducing broker appears nowhere in the interim final rule and once in the proposal, in a Regulatory Flexibility Act footnote citing an unrelated 2012 rule on broker conflicts of interest. There is an irony in that. The proposal would add event contracts to the definition of swap in regulation 1.3, and the introducing broker definition in that same regulation already names swaps among the things whose solicitation triggers it. The sentence that makes the question unavoidable is being written into the section that holds the question.
Three possible answers, and a user who can see only one of them
Put the systems side by side and a venue's paid partner is in one of three positions. It is registered, which anyone can confirm in the association's public BASIC records. It is relying on relief under Letter 26-25, which means a notice and a jointly signed undertaking sit with the Market Participants Division. Or somebody has decided that neither applies, in which case the reasoning exists, at best, as a letter from counsel in a compliance folder.
Only the first is visible to the person being introduced, and that is the part we would ask an operator to fix without waiting to be told. A venue that pays for user acquisition should be able to say, for every paid partner, which of the three applies and on what basis, and the fee relationship belongs on the screen where the first trade happens rather than in an onboarding acknowledgement nobody rereads. The test should be run against the jurisdiction that regulates next rather than the one that has not got here yet, which is Directive 05.
None of this needs a rule that does not exist. The definition is forty three years old, the compensation test is in the regulation, the relief is public, and the self regulator has published the form of words it wants. What is missing is a venue willing to write down which answer applies to each partner before somebody asks. If that is already your standard, the commitment is where to say so in public.