CFTC Warns Prediction Market Insider Traders

The US commodities regulator’s chief enforcement director sent a cautionary message to prediction market insider traders on Tuesday, vowing that violators will face enforcement action.

“We are aware of the speculation about insider trading,” CFTC enforcement director David Miller said at a panel at New York University on Tuesday. “We are watching.”

“There’s a myth in mainstream media and social media that insider trading doesn’t apply in the prediction markets … That is wrong.”

Miller, a former federal prosecutor who was appointed to the position on March 2, said the Commission will use its prosecutorial discretion and will not dedicate resources to “trivial” cases.

“We will only be prosecuting cases against those who tip or trade with misappropriated information,” he said, according to Bloomberg. 

Prediction market insider trading has become a top-of-mind issue among US lawmakers in recent months, threatening the credibility of an industry that recently exceeded $20 billion in monthly volume, according to TRM Labs. 

Event contracts are “swaps,” not gaming

“Our position is that event contracts are not gaming. The event contracts at issue are swaps. Insider trading law applies,” Miller said, according to Reuters. 

He said that the Commission will also focus on a few ​core enforcement areas, including market abuse and violations of laws designed to prevent money laundering.

Related: Democrats press CFTC, ethics watchdog on prediction market insider trading

Prediction market insider trading concerns heightened after a number of well-timed trades ‌ahead of US President Donald Trump’s major announcements.

In another case, an anonymous trader who bet on the capture of Venezuelan leader Nicolás Maduro made over $400,000. 

More recently, users engaged in suspicious trades related to the invasion of Iran and the death of Ayatollah Khamenei, sparking national security concerns. 

New legislation proposed as prediction platforms self-regulate 

In response to mounting public pressure, both leading prediction market platforms, Kalshi and Polymarket, recently introduced new insider trading rules.  

In late March, US lawmakers unveiled the bipartisan Public Integrity in Financial Prediction Markets Act of 2026, aimed at curbing insider trading by government officials. 

That same week, lawmakers introduced the Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act (PREDICT Act).

The CFTC has also come under pressure from Democratic lawmakers recently, who demanded that the agency warn federal employees not to use inside knowledge to trade in prediction markets.

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