The U.S. commodities regulator has issued a clear warning to traders using prediction markets: insider trading rules apply and violators will face enforcement. David Miller, director of enforcement at the Commodity Futures Trading Commission, said Tuesday that the agency is monitoring speculation about illicit trading and is prepared to act.
“We are aware of the speculation about insider trading,” Miller told a New York University panel. “We are watching.” He rejected the idea circulating on social and mainstream media that insider-trading laws do not cover prediction markets, calling that belief incorrect.
Miller, a former federal prosecutor who took the enforcement post on March 2, said the CFTC will use prosecutorial discretion and will not pursue every minor or trivial matter. “We will only be prosecuting cases against those who tip or trade with misappropriated information,” he said.
The agency reaffirmed its position that event contracts offered on many prediction platforms are regulated as “swaps,” not gaming products, and therefore fall under the CFTC’s market conduct rules. Miller said enforcement priorities will include market abuse and violations of anti–money laundering statutes.
Concerns about insider activity have risen after a string of well-timed trades ahead of major announcements involving President Donald Trump. Other episodes that drew scrutiny include an anonymous wager on the capture of Venezuelan leader Nicolás Maduro that reportedly paid out more than $400,000, and suspicious bets tied to the invasion of Iran and reports about the death of Ayatollah Khamenei — trades that prompted national security questions.
In response to public pressure, leading platforms such as Kalshi and Polymarket have implemented new rules aimed at preventing insider trading on their sites. Lawmakers have moved as well: in late March, a bipartisan bill called the Public Integrity in Financial Prediction Markets Act of 2026 was introduced to address trading by government officials, and the PREDICT Act (Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act) was also filed.
Democratic members of Congress have urged the CFTC to explicitly warn federal employees against using nonpublic government information to trade on prediction markets.
The CFTC’s message is straightforward: prediction markets are subject to federal oversight, and those who trade on misappropriated or tipped information should expect enforcement action. Readers are encouraged to consult original sources and official statements for the latest developments.