CFTC Committee Raises Prediction Market Manipulation Concerns

This past Thursday, the first-ever Innovation Advisory Committee of the Commodity Futures Trading Commission met, and one of the key discussions was about manipulating prediction market platforms and whether the current rules do enough to address those involved in such manipulation. 

This comes after some notable incidents lately, and that was a point of contention for regulators and industry executives. 

This meeting had about 30 executives across prediction market platforms, sports betting operators, exchanges, and crypto firms. Of the group, CME Group CEO Terry Duffy spoke most about manipulation. 

“There are a lot of things susceptible to manipulation,” Duffy said in the meeting, the opening remarks of which can be found on YouTube. He mentioned that it's horrible for the industry. 

Recent Prediction Market Incidents Fuel Manipulation Concerns

One of the top "scandals" concerning prediction market platforms involves former teleprompter operator for President Donald Trump, Gabriel Perez. It was reported that he was believed to have made tens of thousands of dollars by engaging with "Mentions" markets involving Trump speeches, something he'd be familiar with as the teleprompter operator. ABC News reported he was in talks "with federal regulators to settle allegations he used his inside knowledge of the president's speeches to win more than $100,000."

There was also U.S. Army Master Sergeant Gannon Ken Van Dyke, who used classified information to generate nearly a half-million dollars in profit related to the capture of Venezuelan President Nicolás Maduro.

Another example was former Congressman George Santos, who was fined $35,000 for manipulating a contract related to his appearance at the State of the Union address. 

Duffy, again the CEO of CME Group, is powering FanDuel Predicts. He mentioned the incident involving Maduro, and CFTC Chairman Michael Selig interrupted Duffy. 

“Those products are not listed, they never were, these occurred offshore and it’s fake news,” Selif said, and Duffy referred to the "fake news" part of his response as "cute." 

While the Maduro trade happened via an overseas Polymarket account, Perez's incident occurred with Kalshi here in the United States. 

Coinbase CEO Proposes Test for Prediction Market Contracts

Also during the meeting, Coinbase CEO Brian Armstrong proposed evaluating certain contracts. 

The three-part point included: 

• Does it create public harm?
• Does the market have a direct causal link to the harm?
• How subject to manipulation is it?

“I think it is dangerous to have something that can be decided by one person,” Armstrong said. “But we have to be careful not to go too far with this because there could be examples where the public good outweighs the risk of it being subject to manipulation by one person.”

Something else Duffy brought up was that, since Trump took office in January 2025, there have been 2,500 self-certifications, and none have been opposed. Duffy believes there is "no doubt" that some of those violated Core Principle 3, which relates to manipulation.