The Commodity Futures Trading Commission is sending a clear, two‑track message about prediction markets this week: They are here to stay, they are useful, and they will be policed like any serious derivatives market.
This week, CFTC Enforcement Director David Miller used remarks at the NYU Law School to warn that the agency will treat insider trading and manipulation in prediction markets as core enforcement priorities. Meanwhile, CFTC Chair Michael Selig has framed the exchanges as a new infrastructure for truth‑discovery in politics and economics while echoing Miller’s guardrails. Selig warned without proper policies, the industry could see an implosion similar to those seen in crypto firms.
Together, the two messages sketch a distinct path for the industry over the next several years: Regulated prediction markets can grow and expand, but only if they tighten their own conduct rules and suppress misuse of confidential information.
CFTC leaders set enforcement priorities, exchange responsibility around insider trading and market manipulation
The prediction markets enforcement signal
Miller delivered his remarks at NYU Law School, where his speech was explicitly about insider trading in prediction markets. He used it to correct what he called a “myth” that these markets somehow tolerate or benefit from misappropriated information.
“Insider trading in the prediction markets, where there is misappropriated information, is precisely the kind of serious violation that we are going after vigorously,” Miller said. “We will aggressively detect, investigate, and, where appropriate, prosecute insider trading in the prediction markets.”
Miller framed insider‑trading cases not as technicalities, but as clear, prosecutable behavior:
“We will only be prosecuting cases against those who tip or trade with misappropriated information,” he said.
Miller wants exchange cooperation
Miller also said: “The era of regulation by enforcement is over.” He added, “We will focus on the Division’s core purpose of policing fraud, abuse, and manipulation rather than setting policy.”
The CFTC wants to move from case‑by‑case policing toward a more structured, rule‑driven regulatory posture, even as the agency keeps using its enforcement powers. Miller emphasized he wants cooperation and transparency from exchanges. Miller said he will be releasing a cooperation policy advisory soon. He emphasized that designated contract markets are the first line of defense:
“The exchanges doing their job are an essential part of the fight against market manipulation and insider trading,” he said.
For prediction markets, that implies:
- Clearer expectations about what kinds of markets and products the CFTC will treat as swaps.
- More explicit rules around surveillance, data retention, and cooperation with the Commission.
- A shift away from relying on headline‑grabbing prosecutions to define the legal landscape.
Selig’s broad vision for prediction markets
Selig laid out the bigger picture in an interview with Decrypt Media this week. He explicitly described prediction markets as a new tool for aggregating dispersed knowledge and a source of information that is more accurate than traditional political polls.
“Prediction markets allow market participants to trade on the probability of future events,” he said. “That makes them a forum for decentralized truth.”
My full interview with @ChairmanSelig of the CFTC.
— Farokh (@farokh) April 1, 2026
We spoke about the Chairman's upbringing, his time at the SEC and now the CFTC, crypto and prediction markets.
Timestamps:
00:00 – Background & discovering crypto
06:57 – Fighting the SEC before joining them
16:13 – Why the… pic.twitter.com/GpGh1D0iRW
Selig also said prediction markets are “now viewed by the public as more accurate than political polls.” That is why he wants them regulated “right here,” not pushed offshore. That is a direct invitation to the industry: If you want to keep growing in the U.S., you must accept the CFTC’s oversight and the conditions that come with it. But his main message was that new technologies like prediction markets should be able to grow in the US without fear of persecution.
“We’ve got to make sure these exchanges come and register here in the United States and that our rules are set up to facilitate fair markets, markets that have investor protections, customer protections, and have real guardrails and rules,” he said.
He also looked at Congress and the slew of bills introduced looking to limit the industry and said, “There’s a lot we can do with or without legislation.”
Selig on exchanges and product risk
Selig also echoed the exchange‑responsibility message that Miller delivered, that they have their own responsibility to evaluate their products to ensure they are not susceptible to manipulation. Kalshi law firm Milbank recently expressed similar thoughts at a webinar on CFTC advisories.
That is a hard suggestion that exchanges will need to hard‑wire anti‑manipulation thinking into how they design contracts, handle data and monitor trading behavior.
As the prediction markets continue to attract attention from legislatures across the country and garner increased scrutiny from the media and public, the two CFTC representatives this week appeared to establish firmer legitimacy, while promising hardening enforcement.
