CME and Kalshi Clash at CFTC Forum as Fight Over Event Contracts Intensifies
Roundtable dispute highlights growing friction between established exchanges and prediction platforms
WASHINGTON — Tensions between traditional derivatives exchanges and emerging prediction platforms spilled into public view during a Commodity Futures Trading Commission roundtable, where CME Group Chairman Terry Duffy challenged the legitimacy and oversight of event-contract markets.
Duffy singled out Kalshi during the Washington, D.C. proceeding, arguing that retail event contracts risk market manipulation and lack the institutional safeguards enforced at established venues. Operating the world’s largest futures exchange by volume, CME has scrutinized how federal regulators treat newer retail competitors.
“We’re not a bunch of carnival barkers at a circus,” Duffy said during the panel, questioning why Kalshi was permitted to list compute-related markets while CME’s own proposed compute contracts remained under regulatory review. Duffy also mocked retail offerings such as contracts tied to the Nathan’s hot dog eating contest.
Kalshi co-founder Luana Lopes Lara turned directly to Duffy: had the Chicago exchange operator ever encountered manipulation on its own platforms? When Duffy responded that his regulatory division employed more staff than Kalshi’s entire company, Lara pointed to operational efficiency before moderator Walt Lukken intervened.
DraftKings CEO Jason Robins then appealed to attendees to cease attacks on competing business models. Lara had maintained that nascent financial markets inherently encounter risks that standard regulatory frameworks are designed to monitor and correct, onshore and offshore.
Federal authorities and state officials are waging a broader jurisdictional battle over whether event-based binary options represent regulated financial derivatives or unlicensed gambling operations. Under standard contract design, platforms price event outcomes between zero and one dollar to reflect the market’s implied probability of occurrence.
CFTC Chair Selig has asserted exclusive federal authority over federally registered prediction exchanges, previously pledging legal action against state regulators attempting to enforce local gambling statutes. The agency subsequently intervened in a dispute involving New York’s attempt to halt trading on Kalshi.
The commission faces mounting scrutiny from federal lawmakers and state courts. In June, the CFTC moved to restrict contracts involving war, assassination, and select sports proposition wagers. Nine Democratic senators recently demanded a prohibition on wildfire contracts over concerns regarding arson and disaster profiteering. Last week, a Washington state judge ordered Kalshi to halt contract offerings tied to sports, politics, and elections within the state under consumer protection and gambling laws.
