The Commodity Futures Trading Commission's first Innovation Advisory Committee meeting convened on Thursday to discuss the latest in prediction markets regulation, including growing concerns on "mention markets" found on the platforms.

The CFTC's Chairman Michael Selig, who is the only official on the federal agency's typically five-member commission board, said the committee's role would be to provide input on CFTC's decisions which would strengthen regulations on markets.

Consisting of over 30 members, the committee includes top brass from Robinhood, Nasdaq and CME. The group first discussed the regulation landscape on crypto and artificial intelligence, but the most impassioned discussions revolved around prediction markets.

Polymarket's CEO and founder, Shayne Coplan and Kalshi's co-founder Luana Lopes Lara, were also present at the roughly three-hour-long meeting.

Key concerns that came up at Thursday's meeting include self-certification for event contracts, as well as "mention markets" — contracts where traders speculate on certain words being used in a speech or an earnings call — and their susceptibility to manipulation. Committee members also discussed a regulatory roadmap for prediction markets.

Self-certification for prediction market platforms

At Thursday's meeting, Terry Duffy, the chair and CEO of CME Group, took one of the most aggressive stances on how prediction markets should operate.

In compliance with the Commodity Exchange Act, prediction market platforms can propose, file and certify event contracts without the CFTC's prior approval. This is known as self-certification. Duffy noted this method, which allows platforms to speed up the process of posting new event contracts, can make markets vulnerable to manipulation.

"There's been 2,500 self-certifications since this administration was taking office in January of 2025, of which none have been opposed," Duffy said. "There's been a lot of self-certifications around products that are in violation of core principles."

After Duffy raised his concerns on market manipulation, Lopes Lara asked him if CME has ever had issues with insider trading.

"If you'd like to have a debate, I'm happy to have a debate with you," he responded.

Lopes Lara stated her support of self-certification, noting that it's beneficial for timely events. "We need to be able to have these markets fast for our users," she said.

Robinhood's CEO flags 'mention markets'

Duffy also highlighted recent instances of insider trading on prediction markets. This includes the April arrest of a U.S. soldier following bets on the capture of Venezuelan leader Nicolás Maduro and a teleprompter operator facing federal investigation in connection with bets related to statements made by President Trump.

CME's Duffy also brought up insider cases related to Kalshi's so-called mention markets, which Robinhood's co-founder and CEO Vlad Tenev shared concerns on too.

Mention markets usually ask what a public figure will say during a speech, event or earnings call.

Tenev did not ask for an outright ban on mention markets but said the federal agency should look at them closely.

A three-part roadmap

During his introductory speech, Selig detailed a three-part roadmap for prediction markets.

First, Selig addressed the agency's proposal from June to amend its rules on what event contracts the CFTC could prohibit. He also noted the term "gaming" needs to be defined and public interest criteria should be spelled out.

"Contracts are at the risk of rejection based on arbitrary whims of political biases, and DCMs [designated contract markets] have been left operating in the dark," he said. Prediction markets operate as DCMs.

The second step involves a proposal to modernize the reporting framework for fully collateralized event contracts.

The third step involves proposing more amendments on how designated contract markets or DCMs should list event contracts and ensuring they have stronger consumer protection requirements.

The committee's first meeting comes after the White House hosted cryptocurrency leaders, along with Selig and Paul Atkins, the chairman for the Securities and Exchange Commission on Wednesday.

There, Selig criticized New York's attorney general Letitia James. The Empire State sued Kalshi in July on the grounds that it's operating as a "illegal gambling operator." The CFTC responded on Aug. 11, issuing an emergency authority and ordering Kalshi to continue providing its event contracts in the state.

"We've also protected federally regulated prediction markets from rogue state attorneys general like Letitia James, who seek to nullify federal law and drive these markets offshore to unregulated and foreign venues," Selig said in remarks on Wednesday.

Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.