A Commodity Futures Trading Commission roundtable meant to gather industry input on prediction market rules turned into a public sparring match Thursday, as CME Group Chairman Terry Duffy and Kalshi co-founder Luana Lopes Lara clashed directly over manipulation risk, market size and regulatory scrutiny at the Washington, D.C. gathering.
Duffy told the room he was “a lot concerned” about prediction markets' susceptibility to manipulation, while defending his own exchange's track record: “We are running the most envious markets in the world in the United States of America.” He took aim at some of Kalshi's contract offerings, sarcastically citing one example: “There's another really economic contract that has been massively important for the United States. That's a Nathan's hot dog eating contest.” Duffy also questioned why Kalshi has been able to list compute-related prediction contracts while CME's own proposed contracts in that category remain stuck in regulatory review.
Pressing his point about scale, Duffy told Lopes Lara directly: “I have more people in my regulatory department than you have in your whole company.”
Kalshi's co-founder pushes back
Lopes Lara didn't let the comparison stand unanswered. She turned Duffy's manipulation concerns back on him, asking: “Has CME ever had any issues with any market manipulation, any issues ever in its history?” On the question of company size and efficiency, she countered: “Maybe you should learn a bit about efficiency then,” arguing that regulatory scrutiny should apply evenly to risks in nascent markets across every platform rather than singling out newer entrants. DraftKings CEO Jason Robins, also on the panel, tried to defuse the exchange, urging participants to “refrain from taking shots at each other's business models or decisions.”
A fight that extends well beyond one roundtable
The Thursday exchange is one front in a much larger jurisdictional battle over who gets to regulate event contracts. Kalshi is currently fighting lawsuits from multiple state regulators who argue its sports-related contracts amount to unlicensed gambling, and on August 11 the CFTC invoked rarely used emergency authority to order Kalshi to keep operating in New York after the state's attorney general sued the exchange and sought more than $36 billion in damages. That same broader push for federal clarity on crypto and derivatives markets echoes the CFTC's own recent moves to widen its oversight footprint across newer trading venues.
Related: CFTC Holds First Innovation Advisory Committee Meeting, Vows Crypto Rules With or Without Congress
The CFTC has separately proposed restrictions on prediction contracts tied to warfare, assassinations and manipulation-prone sports bets, underscoring how unsettled the rulebook still is even as trading volumes on platforms like Kalshi and Polymarket keep climbing. With state attorneys general, a sitting CFTC chairman and two of the industry's biggest exchange operators all staking out competing positions in public, Thursday's roundtable made clear that prediction markets' regulatory future is far from settled.
