INTERVIEW JULY 2026
Interview with Elizabeth Lan Davis: Prediction Markets Cannot Be Easily Undone by a New Government
The former CFTC chief trial attorney draws on her own experience with crypto and Dodd-Frank to explain why.
Interview
Our editor spoke with Elizabeth Lan Davis, partner at Davis Wright Tremaine, whose practice covers commodities, digital assets, and swaps, but who is currently spending much of her time on one fast-moving corner of it: prediction markets. A former CFTC chief trial attorney, she argues that the framework now being built for this market is not one a future government could unwind quickly, even with plenty of grey areas still unresolved. She also warns that the same event contracts driving the market's growth are creating an insider trading risk most companies have not yet reckoned with.
Elizabeth Lan Davis, partner and co-chair of the National Financial Services Practice Group at Davis Wright Tremaine and former CFTC chief trial attorney. Image courtesy of Davis Wright Tremaine.
Box-out: Elizabeth Lan Davis, Partner, Davis Wright Tremaine
Current Title: Partner, Co-Chair of the National Financial Services Practice Group
Company: Davis Wright Tremaine LLP
Background: Elizabeth Lan Davis spent nine years at the CFTC, rising to Chief Trial Attorney in the Division of Enforcement, where she led investigations into fraud, manipulation, digital assets and trade practice issues.
Before the CFTC she was a trial attorney in the DOJ's Tax Division, representing the IRS in federal district and bankruptcy courts. She later chaired McGonigle, P.C., a financial services boutique that combined with Davis Wright Tremaine in 2022.
She holds a J.D. from Tulane University Law School and a B.A. from the University of Pennsylvania, and is ranked Band 1 nationwide and globally for derivatives enforcement by Chambers & Partners.
Her practice today covers commodities, digital assets, swaps and prediction markets, advising clients that range from financial institutions and proprietary trading firms to fintechs and DeFi protocols.
Legal perspective
"Once the first sports event contract began trading on a CFTC-registered platform, the floodgate opened."
— Elizabeth Lan Davis, Partner, Davis Wright Tremaine
A registration queue growing faster than the rules
When Davis worked at the CFTC, the commission might see one new exchange application in a year. Today, by her count, it is sitting on roughly twenty. Most of the new applicants are chasing crypto or prediction market licenses, and that is where almost all of today's volume sits.
The timeline for a given applicant depends on how ready it is when it starts. Preparing an application can take several months, depending on how much work an entity has already put into risk management and surveillance. The commission has 180 days to decide once an application is deemed materially complete, though the current backlog often pushes reviews past that window. Michael Selig is reportedly pushing to bring turnaround back closer to that original six-month target.
Davis's advice to operators thinking about entering the space is practical: start looking now for compliance staff and advisers with real experience of event contracts, because that expertise is in short supply and the search takes longer than most companies expect. Some offshore entities, already used to strict regulatory regimes elsewhere, can arrive more prepared than domestic startups doing this for the first time.
The CFTC's Washington DC headquarters, where a single sitting commissioner now oversees a growing backlog of prediction market applications. © B Christopher / Alamy
Looking back, Davis traces the current flood of listings to a specific moment. When Trump came back into office for his second term, there were a few prediction market applications held up in the pipeline, which the commission moved toward approving. Once the first sports event contracts began trading on a CFTC-registered platform, that changed almost overnight.
The commission itself has changed as much as the queue in front of it. It used to be five commissioners, split across both parties, with debate and process before anything was agreed. Today there is one commissioner, and he is a Republican. The administration is pushing hard for crypto, and it is now putting together a framework for prediction markets to match.
Davis is direct about the pace: it is crazy, in her words, and once that framework is in place and assuming the CFTC is found to have exclusive jurisdiction, undoing it will take real time even if a new administration comes in wanting to. A Democratic win would probably mean a return to five commissioners, but the framework itself, once built, would not simply disappear.
She draws a direct comparison to swaps and derivatives under Dodd-Frank. When those rules were written under then-chair Gary Gensler, a later administration tried to simplify them and ran into pushback from an industry that had already invested heavily in complying with the originals, so the rules were streamlined rather than dismantled. She expects prediction markets to follow the same pattern.
Today, sportsbooks including Underdog, DraftKings and FanDuel already operate under CFTC oversight alongside Kalshi, whether through their own registered exchanges or as brokers routing trades through one, and Davis says these markets are becoming increasingly institutional. The market, in her view, has moved well past novelty contracts and matured into something else entirely.
Companies routinely assume prediction markets have nothing to do with their business — until they check. © infographic by iGaming Review
A risk companies don't see coming
Everyone is talking about prediction markets eventually reaching the Supreme Court, Davis says. The only real question is when, and she thinks the more realistic marker is the Ninth Circuit in 2028 rather than anything sooner. In the meantime, the space remains, in her words, an area of grey. Litigation is ongoing in different states, and the CFTC has grown more aggressive as those cases pile up.
Insider trading is where she spends most of her client conversations now, and it is the area she describes as opening up an entirely new type of risk for companies. Companies routinely tell her prediction markets have nothing to do with their business, until she opens a prediction market platform in front of them and finds a handful of event contracts where their own company's name comes up. That is usually the moment the picture changes completely.
The recent cases give the warning some weight. A Google software engineer was charged in May after allegedly using internal, non-public search data to trade on Polymarket's contract predicting the year's most-searched person, netting more than a million dollars in profit. An Army Special Forces soldier was arrested weeks earlier over trades allegedly placed on classified knowledge of a military operation against Nicolás Maduro. In July, the president's own teleprompter operator was placed on leave after Kalshi flagged trades allegedly placed on the content of the president's speeches, reportedly worth around $100,000, with the case said to be heading toward a settlement with the CFTC.
Davis says it is often a generational thing: younger employees already know these platforms and already use them, which makes the risk far less theoretical than most compliance teams assume. She also compares the moment to what happened with crypto, when the SEC went after influencers who often had little idea they were breaking any rules simply by promoting a token. She expects something similar here, for partners and advisers as much as for employees. Her position is clear: this kind of trading is here to stay, and companies need to update their policies now, rather than wait for a case with their own name attached.
From land grab to consolidation
What defines prediction markets today, in Davis's view, is how broad the space is: politics, economics, weather and climate, crypto, culture and entertainment, and sport, all inside the same asset class, wider than anything the industry has seen before. It was sport, and specifically the first sportsbook getting listed with the CFTC, that changed the trajectory of the whole market.
Because the registration process takes as long as it does, Davis expects the next phase to look different from the current one. She predicts more entities will look to acquire an exchange that is already registered rather than build one from scratch. The approval process still applies even to an acquisition, but she already sees a market forming around it.
Consumer protection is the piece she thinks is furthest behind. It sits almost entirely with the states today, which set their own gambling age minimums, ranging from 18 to 21 depending on the state, and she expects this to become one of the next areas where new federal rules get developed.
None of that has slowed the market down. It is talked about everywhere now and is becoming increasingly mainstream, hitting record numbers as it grows. World Cup trading set new records across the platforms, and Kalshi has since put an Oscar-nominated face on the product, signing Timothée Chalamet for a campaign that has carried the platform well outside financial media.
Davis's own route into this world was not a straight line. She started out pre-med, realised she hated science despite good grades, and drifted instead toward a health law class, assuming she would end up in corporate healthcare law. Instead, she landed a litigation internship at the DOJ. When she had her son, the demands of litigation, the expectation that you drop everything and fly across the country at a moment's notice, made a change necessary, and the CFTC happened to be looking for litigators to work on financial markets at the time.
She jokes that she could have been a crypto millionaire: she once thought about buying bitcoin at $275 apiece, but couldn't, because she was working at the CFTC. She has pivoted more than once since.
Where this leaves the industry
Even with the grey areas still unresolved, Davis's view is straightforward: prediction markets are here to stay, and they are growing rapidly. The rules to regulate them are being developed at the same speed. The open question is no longer whether the market survives the next change in government. It is how much of the industry currently on the fence has actually prepared for the version of oversight now taking shape.
Article written by Elisabet Johansson.
Further Reading & Key Sources
Federal Register, March 2026: Prediction Markets — Advance Notice of Proposed Rulemaking
Bloomberg, May 2026: Google Engineer Charged With Insider Trading on Polymarket
CNBC, July 2026: Trump suspends teleprompter operator over Kalshi bets allegations, White House says
Yahoo Finance, June 2026: Gary Gensler Backs States in Fight Over Prediction Market Regulation
PYMNTS, 14 July 2026: World Cup Trading Pushed Prediction Market Volume Past $50 Billion in June
