- Head US CFTC Mike Selig does not believe prediction markets are a breeding ground for insider trading.
- He sees harm in over-regulation, but advocates for regulation and oversight of betting platforms.
Commodity Futures Trading Commission (CFTC) Chairman Mike Selig has denied reports of widespread insider trading in prediction markets. However, he stressedthat the statement about the lack of clarity of the rules of law enforcement is not true.
During his first 100 days under Selig’s leadership, the agency modernized monitoring systems and initiated legal proceedings against rule violators. He assured that anyone using insider information would be held accountable under federal law.
Thus Selig commented published by the Wall Street Journal Article in which betting platforms were described as poorly regulated and in a “gray area”.
He also noted that excessive regulation would lead to the relocation of activities abroad, making markets even more vulnerable to manipulation. The agency’s position is that markets should be kept domestic, regulated, and enforced under existing laws.
The CFTC assumes that polymarketand Kalshi operate as regulated exchanges with clearing systems and investor protection similar to other derivatives markets.
polymarket и Kalshi dominate the sector, with market capitalizations of $15 billion and $22 billion, respectively, and combined monthly volumes of reached $29,8 billion, an increase of 588% compared to last year.
Users on these platforms buy contracts tied to outcomes. A contract priced at $0,20 pays $1 if the outcome is correct. The price implies odds, but the mechanics are similar to betting.
It is noteworthy that more than 70% of users polymarket Losing money: Of the 1,6 million accounts, only 0,1% earned 67% of the total profit. Fewer than 2000 accounts earned almost $500 million.
For Kalshi The number of losing users is 2,9 times higher than the number of winning ones. Data from over 35,000 markets shows that contracts with a 50% probability of winning paid out only 40% of the time.
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