Trump's CFTC Head Slams Prediction Markets Resistance Under Predecessor

Trump's CFTC Head Slams Prediction Markets Resistance Under Predecessor

CFTC Acting Chair Caroline Pham Seeks to Overhaul Agency's Approach to Prediction Markets

• Caroline Pham, acting chairman of the Commodity Futures Trading Commission (CFTC), is pushing to reverse the agency’s restrictive stance on prediction markets.
• The CFTC will hold a roundtable of experts to reassess regulations on event-based contracts, including wagers on sports and U.S. political outcomes.
• Pham, appointed by President Donald Trump, argues that previous Democratic leadership’s policies have hindered innovation in prediction markets.
• The CFTC’s legal battle against platforms like Polymarket and Kalshi has progressed too far to be easily overturned, requiring extensive regulatory efforts.
• A recent court ruling sided with Kalshi, stating that Congress, not the CFTC, has the authority to ban election betting.

CFTC’s Changing Approach to Prediction Markets

The U.S. Commodity Futures Trading Commission (CFTC), long engaged in legal battles against prediction markets, is facing a potential policy shift under the leadership of Acting Chairman Caroline Pham. Installed by President Donald Trump, Pham has been moving swiftly to reconsider the agency’s enforcement stance on event-based betting platforms, such as Polymarket and Kalshi.

Pham acknowledges that the CFTC’s position—built through rules, enforcement actions, and court arguments—cannot be easily undone. To set the stage for regulatory change, she announced plans to convene a roundtable of experts next month. The goal is to determine how the commission should oversee event-based contracts while addressing legal uncertainties that have clouded the sector.

Legal Uncertainty and Calls for Regulatory Reform

Pham has been a longtime critic of the previous CFTC administration’s crackdown on prediction markets, particularly under former Chairman Rostin Behnam. She argues that the agency’s aggressive enforcement stance has created a "sinkhole of legal uncertainty" and hindered market innovation.

"Unfortunately, the undue delay and anti-innovation policies of the past several years have severely restricted the CFTC’s ability to pivot to common-sense regulation of prediction markets," Pham stated. She emphasized the need for a more holistic regulatory framework that allows prediction markets to flourish while also protecting retail investors from fraud and abusive practices.

The CFTC had previously attempted to block Kalshi from listing election betting contracts, arguing that such contracts fall outside of derivatives law and that the agency lacks the authority to police election markets. However, a federal court ruled against the CFTC, stating that only Congress has the power to prohibit election betting—a major setback for the agency.

A Shift Toward Market-Based Sentiment Analysis

In stark contrast to her predecessor’s position, Pham sees prediction markets as valuable tools for assessing public sentiment and determining probabilities. She described them as "an important new frontier" in leveraging market data to enhance information accuracy and decision-making.

This shift suggests the CFTC may redefine its role in regulating event-based contracts, potentially leading to a more favorable environment for prediction markets.

What’s Next?

As Acting Chairman, Pham is leading the agency while Trump has yet to nominate a permanent CFTC chair. Since Senate confirmations take months, she has a window of opportunity to reshape key policies before a new leader is appointed.

With the upcoming expert roundtable and ongoing legal battles, the future of prediction markets in the U.S. remains uncertain—but Pham’s leadership signals a major shift toward a more open regulatory approach.