Key Takeaways From Sidley Tech Forum 2026

The inaugural Sidley Tech Forum, “Forecasting the Future: Prediction Markets in a Regulated World,” featured some of the hottest stakeholders in the prediction markets space. The event included a keynote address by renowned statistician Nate Silver, as well as panels moderated by Sidley partners D. Scott Bennett, Sharon Flanagan, and Peter Malyshev. We sat down with Ian McGinley, a partner in the firm’s Securities Enforcement and Regulatory practice, who moderated a panel on the regulatory and enforcement outlook, to highlight his core insights from the conversations at the forum. McGinley, a former director of enforcement at the Commodity Futures Trading Commission (CFTC), discussed where he thinks industry leaders are placing their bets for the future.

THE ELEPHANT — AND DONKEY — IN THE ROOM

• The current regulatory environment has been a tailwind for a wave of innovation in prediction markets by transforming them from niche internet businesses into mainstream financial ecosystems.
• People are wondering, given the midterm results and the changing of hands in Congress, how that is going to affect the development of the industry.
• The question becomes, “How does it look if the regulatory environment perhaps switches and is more of a headwind? How do you position yourself for that, and how to continue to grow your business?”

A CORNUCOPIA OF NEW PRODUCTS

• People tend to think of sports, primarily, when thinking about the prediction markets, whereas a lot of the markets are now offering many more types of products.
• There is emerging talk about launching a super app where you can trade stocks, bonds, crypto, and predictions — kind of anything under the sun — and also products that are not related to event contracts, like perpetual futures on stocks.
• The prediction markets are not an isolated financial product. They’re now being incorporated on large-scale platforms. Even the Nasdaq index is an option on prediction-style platforms, and Nasdaq itself has also received regulatory clearance to offer official binary options tied to the index.

ALL EYES ON SCOTUS

• The Supreme Court generally doesn’t have to take any case it doesn’t want. But a legal battle seems to be brewing in which the court can opt to address whether prediction market platforms are subject to state gambling laws or protected by federal financial regulation.
• It’ll be interesting to see how the question, if it reaches the court, is framed — if it’s just about sports event contracts or if there are broader implications. I think the Supreme Court generally tries to make the narrowest decision possible.
• There certainly will be more clarity if the Supreme Court weighs in. One of the things to watch will be if and how the court addresses some definitional questions in the Commodity Exchange Act.

ARE YOU GETTING A FAIR TRADE?

• No one wants insider trading on a platform. If you don’t think you’re going to get a fair trade, you’re not going to trade on that platform. So, it’s legally wrong, but it’s also a business decision in that if you want to attract people to a platform, you have to give them comfort that it’s going to be fair.
• How you communicate and demonstrate that fairness is vital. It encompasses ensuring you have your own enforcement programs, as well as being able to translate some very complicated legal questions into messaging that allays concerns for traders and investors.
• There’s a tension between being very precise about insider trading as a legal matter, which is everyone’s goal, but also educating the public in a way that’s understandable.

THE CFTC WANTS TO HEAR FROM INDUSTRY

• This is really a time that the CFTC wants to foster responsible innovation because there are so many new products in so many areas.
• They want to learn from practitioners in the field, whether it’s legal or business practitioners, to really understand these products and the use of AI in the market. So, there’s a certain humility to the CFTC right now in terms of wanting to meet with market participants. And the best way to handle the rules is to engage with them.
• The CFTC is not saying they know all the answers or have them at their fingertips. They’re going to need some help from the industry to understand what these products are, how they could help the markets, and how they should be regulated.

CLARITY THROUGH REGULATION

• Prediction markets have actually been around for quite a while, just not in the current iteration. I think there’s an interesting debate around how you get clarity in a market that’s moving so quickly. There’s always a lag between markets and the law. That’s how it’s been since the beginning of time.
• Everyone wants clarity. It’s good for businesses, it’s good for regulators. But when you have a space that is so unique and touches so many areas, I think it’s hard to have it. It’s not math. There’s always going to be some discretion that regulators must have.
• The CFTC has prided itself on being less involved in directing market participants line by line in how you should do something, and more about giving a high-level principle that you can’t list contracts that can be readily susceptible to manipulation.

“THE EXCHANGES ARE WATCHING”

• Updating your organization’s policies and procedures is always a good thing to protect against trading in prediction markets because the exchanges are watching, and they’re very active in policing their own markets.
• To the extent that these trades are on blockchain, it’s very easy to identify suspicious trading, and in fact, not only are the platforms doing it, but you have these sleuths online that are making their own reports on potential trading.
• So, it’s an area where regulation is sure to come, but in terms of enforcement, all the tools are there. If there is misconduct in those markets, we’ll see it. We’ll see the CFTC be active.

THE FUTURE IS … CONSOLIDATED?

• There are a lot of market participants right now. Competition is good for markets, and ultimately that, I think, redounds to the benefit of customers, who generally get better prices.
• As with any industry, there will be a consolidation at some point. There are not, you know, a hundred different stock exchanges. It is unlikely there’ll be a hundred different prediction markets, but we’ll see.
• Even assuming there was an adverse SCOTUS decision on the prediction markets related to sports, that wouldn’t affect all the other contracts. There’s certainly enough momentum to think that these markets will be around for a very long time.