At least 42 Democratic members of Congress have asked the U.S. Commodity Futures Trading Commission and the Office of Government Ethics to alert federal employees that using nonpublic information to trade on prediction markets may violate insider-trading rules.
In a letter to CFTC Chair Mike Selig and the OGE, the lawmakers said “multiple incidents” have raised concerns and prompted “speculation about possible insider trading in prediction markets by federal employees.” They requested executive branch–wide guidance making clear that federal employees must not use material, nonpublic information to trade in these markets.
Prediction markets allow users to buy and sell contracts tied to the outcomes of future events. They have come under scrutiny amid allegations of insider trading and potential gambling-law issues. Major platforms, including Kalshi and Polymarket, have said they will introduce additional guardrails to reduce the risk of misuse.
The letter highlights particular episodes that lawmakers say are troubling: wagers on the capture of Venezuelan leader Nicolás Maduro; bets on the length of White House press secretary Karoline Leavitt’s Jan. 7 speech; and reportedly suspicious trades tied to a possible invasion of Iran, the death of Ayatollah Khamenei, and whether former DHS Secretary Kristi Noem would be dismissed. Some trades, the lawmakers say, have raised national security concerns because they could signal impending government actions.
The group asked for a briefing and written answers by April 13. They want to know whether the CFTC has investigated or received reports of federal employees engaging in insider trading on prediction markets and what steps the agency is taking to detect and prevent such activity.
The letter cites the STOCK Act, enacted in 2012, which bars government officials from using material, nonpublic information for personal gain. The lawmakers argue that because the CFTC has classified event contracts as regulated derivatives, those contracts fall under the STOCK Act’s prohibitions. “Thus, the CEA’s prohibition on government officials engaging in insider trading also applies to such activity in prediction markets,” the letter states.
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