Major U.S. financial exchange executives are calling for enhanced federal regulations of prediction markets.
Key Takeaways
- Executives want to protect investors and end market manipulation.
- “Solid regulation” would help markets grow, one CEO says.
- Prediction market platforms have run into political concerns and legal issues.
Nasdaq CEO Adena Friedman and CME Group CEO Terry Duffy say oversight is necessary to protect investors, stop market manipulation, and grow event contract trading on platforms like Kalshi and Polymarket, according to a Reuters report.
“Markets thrive when we have consistent regulation, and it allows investors, first of all, to be protected," Nasdaq CEO Adena Friedman said at the FIA Global Cleared Markets Conference.
“We are going to the (Securities and Exchange Commission) because the options markets are governed by the SEC, and we want to make sure that within the confines of the rule base that we operate it in, we can create a construct that will work for investors."
Duffy, whose derivatives company partnered with FanDuel to help the sports betting operator launch a predictions platform in late 2025, said “solid regulation” would help keep trading exchanges that offer event outcome contracts on track without changing rules during government changes, like the Presidential administration.
"I think that's the biggest problem we have, especially with crypto and especially with predictions," Duffy said.
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Regulation landscape
Prediction markets are regulated by the Commodity Futures Trading Commission, which, jointly with the SEC, oversees derivatives and crypto markets. The two federal agencies publicly vowed in September 2025 to collaborate on the rise of prediction markets.
“The SEC and CFTC should examine opportunities to collaborate to consider where event contracts may be made available to U.S. market participants regardless of where the jurisdictional lines fall,” the two agencies said in a statement last year.
However, that was under the former CFTC chair, and newcomer Michael Selig is working on his own rulemaking plans for the future of derivative markets. Still, prediction market platforms have drawn criticism from politicians who point to possible manipulation of markets that lead to profits from insider information, like with the capture of Venezuelan President Nicolás Maduro earlier this year.
Some lawmakers have called for a prohibition on war and death markets. Two U.S. Senators want to ban public officials from using prediction markets to profit.
Jurisdictional issues
Meanwhile, numerous states, including Nevada and Massachusetts, are mired in court battles with trading exchanges, specifically Kalshi, that offer sports event contracts in legal sports betting jurisdictions. Kalshi lost a ruling in Ohio on Tuesday.
Prediction market proponents claim that since they are regulated federally, they can operate in all 50 states, and they say their markets show the likelihood of an event occurance.
However, many state sports betting regulators and tribal nations see prediction market platforms as illegal gambling companies that operate tax-free without a license, harming the legal landscape that’s been created since PASPA was overturned in 2018.
Evolving space
Prediction markets have exploded over the last year, especially with the evolution of sports event contract offerings, which include markets for major professional and college leagues, similar to traditional sportsbooks.
Kalshi, Crypto.com, and Polymarket have risen quickly in popularity. Polymarket recently received a $2 billion investment from Intercontinental Exchange, which owns the New York Stock Exchange. Nasdaq is seeking prediction market listing approval from the SEC.
DraftKings, FanDuel, and Fanatics have crossed over from sports betting into the prediciton space. Even popular daily fantasy sports operators PrizePicks and Underdog have gotten in on the craze. Underdog recently received CFTC approval to launch its own prediction markets.
