Former CFTC chair Giancarlo calls prediction markets a social good

James Christopher Giancarlo, the former chairman of the Commodity Futures Trading Commission, has defended prediction markets as a social good, arguing that they satisfy an enduring appetite for gambling while producing information that can be useful well beyond the people who place bets.

In a Bloomberg TV interview recapped by Futurism, Giancarlo said that “like it or not, people like to gamble” because “human nature is human nature.” He argued that markets can aggregate the beliefs of tens or hundreds of thousands of participants, potentially yielding more useful signals than a conventional poll of roughly 800 people.

Giancarlo said such pricing could help people seeking clarity about interest rates, gasoline and oil prices, elections and weather. Even non-traders could benefit from the data, he said. His position was that betting markets should face strong federal regulation while continuing to proliferate as sources of information.

The comments come from an industry figure with a direct connection to Polymarket. Polymarket appointed Giancarlo chair of its advisory board in 2022, after the CFTC concluded the company had offered unregistered event-based binary options. Polymarket settled the matter for $1.4 million and began blocking US users.

Giancarlo’s crowds-based case is complicated by research from Yale School of Management. Its study of two years of public Polymarket data, covering 1.72 million accounts, nearly 99,000 events and $13.76 billion in trading volume, found that market accuracy was driven primarily by a small group of informed participants rather than the crowd as a whole.

The study classified 3% of accounts as skilled. Those traders and a smaller group of market makers made up fewer than 3.5% of accounts but captured more than 30% of total gains. The researchers found that skilled traders moved contract prices closer to eventual outcomes and responded to news faster than other groups. “The remaining majority does not produce accuracy; rather, it funds it,” researcher Theis Ingerslev Jensen said.

Concerns around the markets extend beyond whether crowds are wise. Critics have warned that large bettors can wield disproportionate influence and that the contracts may encourage insider trading and disinformation. The Yale study did find evidence of insider trading, but characterized it as sporadic and small rather than a systematic driver of price discovery.

A New York Times review separately found that Polymarket had posted hundreds of false or misleading items on social media, despite the company’s description of itself as “News 2.0.” The Brennan Center has similarly warned that election markets can foster confusion and misinformation when speculative prices are treated as reliable election information.

The CFTC has itself acknowledged the informational case for event contracts, saying their prices may indicate the probability of an outcome and incorporate new information quickly. The agency proposed amendments in June that would weigh information aggregation and price discovery against market-integrity and compliance risks when determining whether contracts are contrary to the public interest. As covered in our August report, the regulator has also outlined a broader agenda to modernize rules and consumer protections for prediction markets.

CFTC-registered prediction markets recorded more than $25 billion in trading volume in 2025, according to the agency, which said the products were rapidly gaining popularity both as financial assets and as information sources.