Tensions Flare as CME, Kalshi Execs Clash Over Prediction Markets in DC

A CFTC roundtable on prediction markets turned heated Thursday when CME Group Chairman Terry Duffy and Kalshi co-founder Luana Lopes Lara traded insults over market manipulation and regulation.

Duffy, whose CME Group operates the world's largest futures exchange by volume, said he was "a lot concerned" about prediction markets and argued that some contracts are susceptible to manipulation.

"We're not a bunch of carnival barkers at a circus," Duffy said. "We are running the most envious markets in the world in the United States of America."

Duffy then took aim at the types of contracts Kalshi offers, mocking one in particular.

"There's another really economic contract that has been massively important for the United States. That's a Nathan's hot dog eating contest," Duffy said sarcastically.

He also questioned why Kalshi could offer a compute prediction market while CME's proposed compute contracts remained under review.

"I just wanted to respond since we were called by name here," Lara said. "I would actually have to ask Terry: Has CME ever had any issues with any market manipulation, any issues ever in its history?"

"If you'd like to have a debate, I'm happy to have a debate with you," Duffy replied.

"I'm just asking a simple answer to a question," Lara said.

"I have more people in my regulatory department than you have in your whole company," Duffy said, referring to the size of CME Group's operation compared to Kalshi.

"Maybe you should learn a bit about efficiency then," Lara fired back.

"Well, maybe you should learn about credible markets," Duffy replied, before moderator Walt Lukken stepped in.

Lara then argued that the problems Duffy raised were not unique to prediction markets.

"Every market has risk and every nascent market will have risks as well, and there have been issues in every single traditional market and every single exchange here, onshore and offshore," she said. "And I think the point of having regulation is that you find these issues, you address these issues, and there's a way to address them in a correct way.”

DraftKings CEO Jason Robins later urged participants to stop attacking each other's businesses.

"I would just ask everybody, both in this hearing and then also in future communications, to try to refrain from taking shots at each other's business models or decisions you may not 100% agree with," Robins said. "That doesn't advance the discussion."

Prediction market platforms that operate in the United States, like Polymarket and Kalshi, have become the focus of a fight between federal regulators and states over whether contracts tied to sports, elections, and other real-world events are federally regulated derivatives or gambling products subject to state law.