The Commodity Futures Trading Commission (CFTC) left its first Innovation Advisory Committee meeting with conflicting opinions on standards for prediction markets.
Last Friday’s inaugural meeting of the Committee in Washington, D.C. allowed industry leaders and officials to discuss technology, finance, policy, and law. Held during a time of national uncertainty about the future of prediction markets, those discussions only highlighted the divide in opinions that exist, including internally.
CFTC hosts meeting with industry leaders
The first-ever Committee meeting included more than 30 representatives from companies such as Kalshi, Polymarket, Robinhood, CME Group and Nasdaq, among others. Conversations largely centered on self-certification, market manipulation, insider trading, and consumer protection.
CME Group CEO Terry Duffy took an early stand in expressing his displeasure with the CFTC’s self-certification process, which allows licensed platforms to create and publish new prediction markets without clearing them with the CFTC.
“There’s been 2,500 self-certifications since this administration took office in January of 2025, of which none have been opposed,” he said, arguing that there are presently markets that contradict or violate the CFTC’s operating standards.
Duffy also questioned the standing of “mention markets,” which allow consumers to predict words or phrases that will be said by commentators, speakers, analysts, or other individuals with a voice during an event. Robinhood CEO Vlad Tenev also suggested that mention markets needed a thorough review.
“There are definitely people that are manipulating these contracts,” Duffy said.
Different ideas for prediction markets
Although several Committee members raised various concerns about prediction markets, they were doused in cold water by Kalshi Chief Operating Officer and co-founder Luana Lopes Lara.
The Brazilian entrepreneur defended self-certification, claiming that operators needed the freedom to quickly launch prediction markets without a lengthy review process. This allows platforms to react in real-time to events not only with public-influenced market prices, but with new markets to reflect developments across a plethora of industries.
Lopes Lara also rebuffed Duffy’s assertion about manipulation in mention markets. NPR previously cited a source who claimed that Lopes Lara was a staunch supporter of mention markets, despite concerns from Kalshi’s legal team.
The persistent belief in mention markets comes despite recent news that federal regulators had launched a review of mention markets in the wake of a scandal involving President Donald Trump’s teleprompter operator, who used his access to Trump’s speech material to win over $100,000 at Kalshi.
Responsible trading standards
Amid discussions from various participants, CFTC Chairman Michael S. Selig shared a three-part regulatory framework that covered prohibited event contracts, reporting requirements, and rules for how contracts are listed and how customers are protected.
“We’ve heard the concerns of public commenters about inadequate consumer protections for retail loud and clear,” Selig said.
Selig also reaffirmed the CFTC’s exclusive right to regulate prediction markets following several recent losses in federal courts across the country, which either allowed state officials to enforce gaming regulations or prevented operators of prediction markets from preemptively blocking state enforcement. Additionally, he attacked New York Attorney General Letitia James for the state’s lawsuit against Kalshi for the same reason.
The Trade Handle Prediction Markets Take
The recent wave of legal losses involving prediction markets may require operators to work with federal regulators more than ever before. Internal disagreements over the legitimacy of mention markets highlight the general uncertainty of the prediction industry, which is poised to explode in activity with the NFL season and midterm elections on the immediate horizon.