CFTC Chair Says Agency Is Watching Prediction Markets for Manipulation Ahead of Midterms
CFTC Chairman Michael Selig said on October 23 that the agency is closely monitoring prediction markets for manipulation ahead of the November 3 midterms, and that it is separately scrutinizing oil market trading tied to President Trump's announcements about the war in Iran. Combined midterm open interest on Kalshi and Polymarket stood at $250 million as of October 18, with Kalshi holding 84%. Selig acknowledged the agency often catches political figures attempting to trade 'oftentimes after the fact.' The remarks highlight the CFTC's dual and somewhat conflicting role as both the platforms' federal protector and their manipulation watchdog, at a time when the agency has shed enforcement staff.
CFTC Chairman Michael Selig said in a Bloomberg interview on October 23, 2026 that the agency is keeping a close watch on prediction markets for signs of manipulation ahead of the November 3 midterm elections. He also said the CFTC is scrutinizing oil market trading related to President Trump's announcements about the war in Iran, an inquiry that reportedly examined roughly 6 million barrels of trading activity. The remarks came as combined midterm open interest on Kalshi and Polymarket reached $250 million as of October 18, according to Dune Analytics data, with Kalshi accounting for 84% of the total. Selig did not identify a new election-related enforcement case; the comments describe a monitoring posture rather than a specific action.
The monitoring stance reflects the CFTC's unusual dual role in the prediction market dispute. The same agency that has sued multiple states to defend the platforms' federal jurisdiction, filed amicus briefs asserting exclusive authority over event contracts, and moved to classify event contracts as swaps, is also the agency responsible for policing those same markets for manipulation and insider trading. The two roles are not contradictory in principle — a regulator can both defend its jurisdiction and enforce within it — but they create a tension in practice. The CFTC's defense of the platforms rests partly on the argument that federal regulation provides better oversight than state gambling law would; that argument is only credible if the CFTC actually conducts rigorous oversight. Selig's public emphasis on monitoring ahead of the midterms is, in part, a demonstration that the agency is fulfilling the oversight role that justifies its claim to exclusive jurisdiction.
The agency's capacity to conduct that oversight is a genuine question. Reporting notes that the CFTC has shed staff and that its enforcement caseload has shrunk since 2024, at the same time that prediction market volume has exploded to record levels and the number of individual markets has grown into the tens of thousands. Selig's acknowledgment that the agency often catches political figures attempting to trade 'oftentimes after the fact' is a candid admission of the limits of real-time surveillance: with hundreds of thousands of trades across thousands of markets, detecting manipulation as it happens is difficult, and the agency's enforcement record is largely retrospective. The CFTC's past prediction market enforcement — fines and three-year trading bans against Gabriel Perez and former Congressman George Santos, the latter for making material misrepresentations on social media about his plans while trading positions that benefited from the resulting price moves — illustrates both that the agency does act and that it acts after the fact rather than preventing the misconduct in advance.
The oil-trading inquiry adds a dimension beyond prediction markets. The CFTC's scrutiny of oil market trading tied to Trump's Iran announcements suggests the agency is concerned about the same information-integrity problem — trading on advance knowledge of government actions — across both traditional commodity markets and prediction markets. This parallels the Pentagon's October 20 memo barring Department of Defense personnel from trading on non-public information, and together the two actions reflect a federal government increasingly alert to the risk that advance knowledge of geopolitical and military decisions is being monetized through financial markets, prediction markets included. For the prediction market sector, Selig's monitoring posture is a double-edged signal. It demonstrates that the CFTC takes its oversight role seriously, which supports the platforms' argument that federal regulation is adequate. But it also publicly acknowledges that manipulation and insider trading are real risks in these markets, especially around elections and geopolitical events — which is precisely the argument that state regulators and the NFL have made in urging that the markets be restricted. The midterms will be the largest test to date of whether the CFTC's monitoring is sufficient to maintain integrity in markets where the incentives to trade on non-public information are at their highest.
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