Five Ways Caroline Pham Reshaped Regulated Prediction Markets

When Caroline Pham took over as Acting Chair of the Commodity Futures Trading Commission (CFTC), the regulated prediction market industry was just emerging from its startup phase. Less than a year later, it looks dramatically different.

Polymarket is inching back into the U.S. market. PredictIt has secured a full DCM license. Kalshi’s partnerships have expanded well beyond retail brokers to mainstream media outlets. None of this would have happened without Pham’s shift away from strict enforcement and toward tackling fraud and consumer harm — a change that gave the industry room to grow.

Pham announced her final day as CFTC Acting Chair on December 22, just shy of a year in the role. Her successor, Mike Selig, is expected to continue shaping policy for crypto assets and prediction markets amid looming legal battles with states and tribes over regulatory authority.

With a new CFTC reign imminent, we take a look back at five ways Pham transformed the landscape for regulated event trading.

1. Refocusing enforcement on fraud and harm

Pham began her tenure by redirecting the CFTC’s attention toward fraud that harms customers and away from technical infractions that produced little benefit for consumers. Her priorities centered on what she called “responsible innovation and fair competition in our markets…”

That shift opened the door for new categories of event contracts, including sports and politically adjacent markets. It also helped create space for companies like DraftKings and FanDuel to explore CFTC-regulated products — even as Pham publicly noted she didn’t want the agency “registering Las Vegas sportsbooks and other betting venues.”

The resulting influx of both new and returning entrants to the prediction market sector was remarkable. Questions about how to prevent manipulation of event outcomes or contract resolutions will now fall to her successor — or to a future CFTC leadership team.

2. PredictIt secures full DCM license

PredictIt, the academic platform that first brought prediction markets to mainstream U.S. users, finally secured a full Designated Contract Market (DCM) license in September — a milestone made possible under Pham’s leadership.

After the CFTC revoked PredictIt’s no-action letter in 2022, the exchange sued the agency under the Administrative Procedure Act (APA). Rather than continue the legal battle, Pham pursued a settlement that resolved the dispute and expanded PredictIt’s trading limits, lifting both trade caps and trader-count restrictions.

The agreement not only allowed PredictIt to remain in the regulated U.S. market but also redefined what qualifies as a “political contract.” By recognizing markets beyond just elections — such as those tied to government policies or decisions — Pham signaled a far broader vision for political and policy-based forecasting.

3. Bringing crypto into traditional derivatives

In December, Pham launched a pilot program allowing cryptocurrencies to be used as variation margin — the daily settlement payment in which the losing party in a derivatives trade pays the winner. She also released new guidance on tokenized collateral, supporting blockchain-based derivatives like the contracts Kalshi has built on Solana.

Tokenization connects event contracts directly to digital assets. It opens opportunities for traders to lend positions for interest or use them with leverage under transparent collateral models. While these advanced features aren’t live yet, crypto builders are actively working to bring them to market. Pham’s policy framework ensures they’ll be able to launch legally and innovate under CFTC oversight.

Together, these steps brought crypto closer to the traditional derivatives ecosystem than ever before.

4. Polymarket’s U.S. return

In August, Pham launched a yearlong “crypto sprint” to implement the White House’s digital-asset policy recommendations. Part of that initiative included granting Polymarket a no-action letter to resolve data reporting requirements — the same relief provided to other registered event markets.

That single move cleared the last regulatory hurdle for Polymarket to re-enter the U.S. market, which it had exited as part of a 2022 settlement. The CFTC’s decision marked a complete reversal of its earlier stance, effectively welcoming back the world’s largest crypto-native prediction market platform.

Pham’s acceptance of Polymarket’s compliance framework signaled that crypto-native exchanges could operate legally under CFTC supervision — a notable departure from the agency’s enforcement posture just three years prior.

5. Quiet backing for sports contracts

Pham’s CFTC took a largely hands-off approach to sports contracts. Aside from requesting compliance documentation from Crypto.com and Kalshi early in 2025, the agency avoided enforcement actions even as state regulators pursued lawsuits challenging the legality of sports markets.

While not an explicit endorsement, this restraint may prove just as consequential. By not intervening, Pham effectively normalized sports event contracts within the CFTC’s jurisdiction. If future commissioners attempt to ban them, they risk facing APA challenges over inconsistency with the agency’s previous position.

If Selig takes a similarly permissive approach, as he’s already indicated, the CFTC’s inaction could help sports contracts secure a regulatory foothold that becomes more difficult to reverse.

Pham’s broader legacy

Taken together, Pham’s decisions reframed how the CFTC engages with event-based trading. Under her leadership, prediction markets gained legitimacy, tokenized collateral entered the mainstream, and crypto exchanges found a path back to compliance.

Her short tenure showed that a shift in tone, from punishment to partnership, can have outsized effects on innovation. As Selig inherits both the opportunities and challenges that Chairman Pham set in motion, the CFTC’s next phase will determine whether prediction markets remain a regulatory experiment or finally cement their place alongside other core derivatives markets. The fate of sports event contracts will also likely be determined under the incoming CFTC regime.