CME’s Duffy and Selig clash at CFTC hearing as sports-event contract rules drag on

A public clash at the US Commodity Futures Trading Commission (CFTC) this week underscored how unsettled prediction markets and sports-event contracts still are — and that matters because what the CFTC decides could determine whether these products expand, tighten up, or get pushed further offshore. The flashpoint came Thursday afternoon at the inaugural conference of the CFTC’s Innovation Advisory Committee at the regulator’s Washington, DC headquarters, after hours of discussion that ranged from crypto asset management to “agentic finance.”

The temperature changed quickly once the committee moved into prediction markets. CME Group CEO Terrence Duffy opened with warnings about market manipulation, and CFTC Chairman Michael Selig (sworn in as the 16th chair last December) pushed back in a tense exchange. Duffy said certain contracts are “susceptible to manipulation” and argued they could damage market integrity, pointing to three examples he said run afoul of CFTC Core Principle 3, which requires Designated Contract Markets (DCMs) to list products that aren’t vulnerable to manipulation.

Duffy cited a contract tied to the ouster of Venezuela President Nicolas Maduro, trades he linked to a former teleprompter operator for US President Donald Trump, and “several sports-related contracts.” Selig interjected that the products were “not listed” in the US but instead offshore. That statement became a point of contention online because the teleprompter-related trades were reportedly placed on Kalshi, a US-based platform, while Selig did correctly note that the Maduro trade he referenced was made on an offshore platform.

The teleprompter episode centers on Gabriel Perez, described as Trump’s longtime teleprompter operator, who is reportedly under investigation for “mention” trades related to the president’s remarks. Perez allegedly generated more than $100,000 on the contracts and is being probed for trading on insider information connected to Trump’s prepared remarks. Kalshi’s internal surveillance team flagged the trades and alerted the CFTC. Kalshi co-founder Luana Lopes Lara attended the meeting in place of CEO Tarek Mansour, her former MIT classmate.

The Maduro-related example involves Gannon Van Dyke, identified as a US special forces soldier, who is facing charges after allegedly using classified information on a Maduro raid for a series of Polymarket trades. Beyond those headline examples, Duffy argued that the industry shouldn’t chase participants out of regulated markets by lowering standards, saying, “we are not a bunch of carnival barkers at a circus,” while describing derivatives markets as “the most envious markets in the world.”

Duffy’s sharpest back-and-forth didn’t end with the chair. He later confronted Lara over why the CFTC has allowed Kalshi to offer “compute contracts” while CME’s application on similar derivatives remains under review. The compute products are described as binary contracts that let users trade on the future price of AI graphical processing units, including microchips from Nvidia. When Lara asked whether CME had ever dealt with a manipulation case, Duffy quipped that CME’s regulatory staff is larger than Kalshi’s entire workforce; Lara shot back, “maybe you should learn a bit about efficiency then.”

Sportsbook executives were also in the room, including DraftKings CEO Jason Robins, Fanatics Betting + Gaming CEO Matt King, and FanDuel CEO Christian Genetski. Robins urged attendees to avoid “any infighting” that could interfere with “constructive dialogue.” King said consumer protections and responsible trading should be tackled with a principles-based approach, while Genetski said FanDuel’s immediate objectives around predictions center on building consumer trust. None of the sportsbook leaders used the session to dig into specifics such as market-making rules or federal preemption.

On next steps, Selig pointed to multiple paths for a prediction-markets roadmap. The CFTC has already proposed amendments to Rule 40.11 that would give the agency discretion to decide whether contracts on war, terrorism, and assassination are contrary to the public interest. He also said the regulator may set expectations for product governance, market design, and incentive programs. But he didn’t say whether the committee will meet again this year, or whether final rules on sports-event contracts could arrive before the start of the football season.