The Commodity Futures Trading Commission’s first Innovation Advisory Committee meeting placed prediction markets at the centre of a wider discussion about how rapidly expanding event contracts should operate under federal oversight.
The meeting brought together more than 30 members from companies including CME Group, Kalshi, Polymarket, Robinhood and Nasdaq. Discussions initially covered crypto and artificial intelligence, but event contracts generated the strongest disagreements, particularly around self-certification and contracts that speculate on words used by public figures.
CME and Kalshi Clash Over Market Controls
CME Group Chairman and CEO Terry Duffy raised concerns about the ability of prediction-market operators to self-certify contracts without obtaining prior CFTC approval. Under the Commodity Exchange Act, platforms can file and certify event contracts themselves, allowing them to bring products to market more quickly.
Duffy argued that this process can expose markets to manipulation. He said: “There’s been 2,500 self-certifications since this administration was taking office in January of 2025, of which none have been opposed,” adding, “There’s been a lot of self-certifications around products that are in violation of core principles.”
Duffy also criticised contracts offered by Kalshi and questioned the susceptibility of some event markets to manipulation. His comments prompted Kalshi co-founder Luana Lopes Lara to challenge CME’s own record.
The exchange became increasingly confrontational before moderator Walt Lukken intervened. Lara later defended self-certification, saying timely markets require speed.
DraftKings CEO Jason Robins urged participants to avoid personal criticism. “I would just ask everybody, both in this hearing and then also in future communications, to try to refrain from taking shots at each other’s business models or decisions you may not 100% agree with,” he said. “That doesn’t advance the discussion.”
Regulators Examine New Contract Categories
The committee also examined so-called mention markets, where traders speculate on words that may appear during speeches or earnings calls. Robinhood CEO Vlad Tenev said the CFTC should examine these contracts closely rather than calling for an outright prohibition.
The discussion also followed concerns about insider trading connected to prediction markets, including cases involving bets linked to the capture of Venezuelan leader Nicolás Maduro and statements by President Donald Trump.
CFTC Chair Michael Selig outlined a regulatory roadmap that includes changes to rules governing which event contracts the agency can prohibit. He also called for greater clarity around the definition of “gaming” and public-interest criteria.
The agency plans to modernize reporting requirements for fully collateralized event contracts and propose further amendments governing how designated contract markets list these products, alongside stronger consumer protections.
State Disputes Add Pressure
The federal debate comes as prediction-market operators face challenges from state authorities. Kalshi has faced legal action in several states, including Washington and New York, over whether its event contracts constitute gambling subject to state regulation.
The CFTC has defended its federal authority over prediction markets and has taken steps to support Kalshi during the New York dispute.
Earlier proposals also targeted contracts involving war, assassination and certain sports proposition bets because of manipulation concerns. Nine Democratic senators separately urged restrictions on wildfire-related contracts, citing potential risks involving arson, insider trading and disaster profiteering.
Source:
“Tensions Flare as CME, Kalshi Execs Clash Over Prediction Markets in DC”, finance.yahoo.com, August 21, 2026
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