CME and Kalshi Executives Clash With CFTC Over Prediction Market Oversight

CME Group Chairman and CEO Terrence Duffy and Kalshi co-founder Luana Lopes Lara traded accusations at a Commodity Futures Trading Committee meeting Thursday. The regulator signaled it would tighten oversight of a prediction-market sector now pulling in mainstream political and sports volume.

The confrontation played out at a CFTC Innovation Advisory Committee meeting on Aug. 20, 2026, in Washington, D.C. Duffy argued that prediction-market contracts are vulnerable to manipulation. He cited wagers tied to President Trump’s State of the Union address and the ouster of Venezuelan President Nicolás Maduro. CFTC Chair Michael Selig cut him off, saying those products “occurred offshore, and that’s fake news.”

Selig said he expects the CFTC to propose more amendments to how designated contract markets list event contracts and to put consumer-protection standards in place. “We’ve heard the concerns of public commenters about inadequate consumer protections for retail loud and clear,” he said, according to The Block. In practice, that means platforms would face new listing and manipulation rules, not just disclosure requirements.

Duffy, who runs the world’s largest futures exchange, was blunter. “There are definitely people that are manipulating these contracts,” he said. “That is not good for our industry. That is horrible for our industry.” Listing markets susceptible to manipulation, he added, was “really doing the opposite of what we’re trying to effectuate” , a reference to Trump’s goal of making the United States the “crypto capital of the world.” He also questioned why Kalshi could offer a compute prediction market while CME’s proposed compute contracts remained under review, and he singled out Kalshi’s Nathan’s hot dog eating contest contract as an example of a non-economic market.

Lara, identified by The Block as Kalshi’s chief operating officer and by Decrypt as a co-founder, pushed back. She asked whether CME had “ever had any issues with any market manipulation, any issues ever in its history.” Duffy offered to debate rather than answer. Lara pressed for “a simple answer to a question.” Duffy replied, “I have more people in my regulatory department than you have in your whole company.” Lara shot back: “Maybe you should learn a bit about efficiency then.” Duffy: “Well, maybe you should learn about credible markets.” Moderator Walt Lukken stepped in to separate them.

Lara’s broader argument: risk in nascent markets is normal and manageable through regulation. “Every market has risk and every nascent market will have risks as well, and there have been issues in every single traditional market and every single exchange here, onshore and offshore,” she said, per Decrypt. “I think the point of having regulation is that you find these issues, you address these issues, and there’s a way to address them in a correct way.” That is the core disagreement. Whether existing rules suffice, or whether prediction markets need a tighter bespoke regime.

The friction matters beyond the room. The CFTC has proposed a framework asserting “exclusive jurisdiction” over prediction markets, including sports-related contracts, and has sued several states over their attempts to regulate the sector. That means federal authority could displace state-level regulation if the framework holds. In June the agency proposed restrictions on certain contracts involving war or assassination and some sports proposition bets it considers particularly susceptible to manipulation. Nine Democratic senators wrote Selig earlier in August urging him to prohibit wildfire event contracts, warning of arson, insider trading, and disaster-profiteering incentives. Lawmakers have introduced bills to bar prediction contracts tied to sports or casino-style games from being listed on registered platforms; the Senate has passed a measure to ban lawmakers from transacting on prediction markets themselves.

Manipulation concerns are not hypothetical. A U.S. soldier was accused of using secret intelligence to bet on Polymarket about Maduro’s capture. Trump’s longtime teleprompter operator allegedly used insider knowledge to bet on Kalshi about the State of the Union. Both Kalshi and Polymarket have said they have put new measures in place to curb insider trading and market manipulation.

CME itself has traded more than 100 million event contracts since launching them last year, the exchange said in a Feb. 13, 2026 press release cited by The Block. The prediction-market industry is valued at billions of dollars. Kalshi’s own legal standing remains unsettled. A Washington judge ordered the exchange to stop offering contracts in the state; two days earlier the CFTC ordered Kalshi to keep trading amid a New York dispute.

DraftKings CEO Jason Robins, also present, tried to lower the temperature. “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.”

Selig indicated more rule amendments are coming. When they land, the standards Duffy and Lara spent Thursday fighting over (listing rules, manipulation safeguards, what counts as an economic contract) are the ones platforms would have to meet.