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 scrutinising 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 trading 'oftentimes after the fact.' The remarks highlight the CFTC's dual role as both the platforms' federal protector and their manipulation watchdog.
CFTC Chairman Michael Selig said in a Bloomberg interview on October 23, 2026 that the agency is watching prediction markets closely for manipulation ahead of the November 3 midterms, and is separately scrutinising oil market trading related to President Trump's announcements about the war in Iran — an inquiry reportedly examining roughly 6 million barrels of activity. The comments came as combined midterm open interest on Kalshi and Polymarket reached $250 million as of October 18, per Dune Analytics, with Kalshi accounting for 84%. Selig did not identify a new election-related enforcement case; the remarks describe a monitoring posture rather than a specific action.
For UK readers, the CFTC's position resembles the FCA simultaneously defending a market's right to exist and policing it for market abuse — except the tension is sharper here because the CFTC is actively litigating against states to keep these markets federally regulated. The same agency that has sued multiple states to defend the platforms' jurisdiction, asserted exclusive authority over event contracts, and moved to classify them as swaps is also responsible for policing those markets for manipulation and insider trading. The roles are not contradictory in principle, but they create practical tension: the CFTC's defence of the platforms rests partly on the claim that federal regulation provides better oversight than state gambling law would, and that claim is only credible if the CFTC actually conducts rigorous oversight. Selig's public emphasis on monitoring is, in part, a demonstration that the agency is fulfilling the role that justifies its claim to exclusive jurisdiction.
The agency's capacity for that oversight is a genuine question. Reporting notes the CFTC has shed staff and its enforcement caseload has shrunk since 2024, even as prediction market volume has exploded and the number of markets has grown into the tens of thousands. Selig's acknowledgment that the agency often catches political figures '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 hard, and the 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 while holding positions that benefited from the resulting price moves — shows both that the agency acts and that it acts after the fact.
The oil-trading inquiry adds a dimension beyond prediction markets. The CFTC's scrutiny of oil trading tied to Trump's Iran announcements suggests concern 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; together the two reflect a federal government increasingly alert to the risk that advance knowledge of geopolitical and military decisions is being monetised through financial markets. For the sector, Selig's posture is double-edged. It demonstrates the CFTC takes oversight seriously, supporting the platforms' argument that federal regulation is adequate. But it also publicly acknowledges that manipulation and insider trading are real risks, especially around elections and geopolitical events — precisely the argument state regulators and the NFL have made in urging restriction. The midterms will be the largest test yet of whether the CFTC's monitoring is sufficient to maintain integrity in markets where the incentives to trade on non-public information are highest.
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