CFTC Innovation Advisory Committee tackles prediction market risks in inaugural meeting

The Commodity Futures Trading Commission held its first-ever Innovation Advisory Committee meeting on August 20, and the conversation landed squarely on one of the fastest-growing corners of financial markets: prediction markets and event contracts. Chairman Michael S. Selig used the three-hour session to outline plans for new “rules of the road,” including amendments to CFTC Rule 40.11 designed to curb manipulation and tighten consumer protections. Who was in the room and what they said The committee’s roster read like a who’s-who of firms with direct stakes in the outcome. Kalshi CEO Luana Lopes Lara, Coinbase CEO Brian Armstrong, and CME Group Chairman Terry Duffy all participated in discussions that ranged from sports betting manipulation to the merits of a unified federal framework. Lopes Lara made the case that prediction markets shouldn’t be subject to a patchwork of state-by-state regulations. Her argument: a consistent federal approach would give platforms the certainty they need to scale, while also making oversight more effective. The meeting didn’t shy away from concrete examples of what can go wrong. A Kalshi contract tied to former congressman George Santos came up as...