The Commodity Futures Trading Commission’s (CFTC) first Innovation Advisory Committee has met to discuss the regulation of prediction markets, including concerns about "mention markets" offered by platforms.
CNBC reported that the CFTC Chairman, Michael Selig, highlighted committee's role would be to provide input to the CFTC to strengthen market regulation.
In addition to discussing prediction markets, the committee also addressed the regulatory setting for cryptocurrency and artificial intelligence. Furthermore, the committee consists of over 30 members, including those from Robinhood, Nasdaq and CME.
During his introductory speech, Selig outlined a three-part roadmap to create clearer, more consistent rules for prediction markets. First, he said the CFTC should specify which types of event contracts may be prohibited, define terms such as “gaming” and set clearer public-interest standards.
Second, the agency plans to modernize its reporting framework for fully collateralized event contracts. Finally, Selig said the CFTC would consider additional rules governing how designated contract markets list event contracts, as well as stronger consumer-protection requirements for participants in these markets.
During the meeting, key concerns included the self-certification process for event contracts and the risks associated with “mention markets.” In these markets, traders bet on specific words being used in speeches or earnings calls, bringing up questions about their vulnerability to manipulation.
The harshest criticism came from CME Group CEO Terry Duffy, who noted that self-certification allows platforms to speed up the process of posting new event contracts. For context, under the Commodity Exchange Act, prediction market platforms are permitted to propose, file and certify event contracts without first obtaining the CFTC’s approval.
According to Duffy, this method can make markets vulnerable to manipulation.
Duffy further argued that “there have been 2,500 self-certifications since this administration took office in January of 2025, of which none have been opposed.” He also noted that many products have been self-certified despite violating core principles.
Meanwhile, Kalshi Co-founder Lopes Lara responded that self-certification is beneficial for timely events. “We need to be able to have these markets fast for our users,” she said.
Duffy also cited recent insider-trading cases involving prediction markets, including bets tied to Nicolás Maduro’s capture and statements by President Trump. He and Robinhood CEO Vlad Tenev also raised concerns about Kalshi’s “mention markets,” urging closer regulatory scrutiny rather than an outright ban.
Criticism of prediction markets extends beyond the US, with the Danish Gambling Authority securing a court order this week to block Polymarket, adding to growing regulatory scrutiny across Europe
