At least 42 Democratic lawmakers have written to the Commodity Futures Trading Commission and the Office of Government Ethics, calling on both agencies to issue guidance warning federal employees against using nonpublic information to trade on prediction markets. The letter was prompted by what the lawmakers describe as multiple incidents that have fueled speculation about possible insider trading by government personnel. The lawmakers are requesting a briefing and answers to a series of questions by April 13.
Prediction markets allow users to trade contracts based on the outcomes of future events and have faced growing scrutiny over allegations of insider trading and potential violations of gambling laws. The two largest platforms, Kalshi and Polymarket, have each announced plans to introduce safeguards aimed at preventing such incidents. Regulators and legislators alike have taken increasing interest in how these platforms operate and who may be exploiting them.
Among the specific incidents cited in the letter were users who placed bets on the capture of Venezuelan leader Nicolás Maduro and others who wagered on the length of a speech by White House press secretary Karoline Leavitt on January 7. The lawmakers also flagged reports of suspicious trades related to a potential invasion of Iran and the death of Ayatollah Khamenei, which they said raised national security concerns about the possible signaling of impending military action. Additional trades concerning whether former Department of Homeland Security Secretary Kristi Noem would be dismissed were also mentioned.
The letter, addressed to CFTC Chair Mike Selig, asks the commission to clarify whether it has investigated or received any reports of federal employees engaging in insider trading on these platforms. Lawmakers are also seeking details on what steps the CFTC is currently taking to detect and prevent such activity. The group is pressing for executive branch-wide guidance to be circulated as a matter of urgency.
The legal basis for the lawmakers’ demands rests in part on the STOCK Act, signed into law by former President Barack Obama in 2012, which clarifies that government officials may not use material, nonpublic information for personal financial gain. The lawmakers argue that because the CFTC has determined that event contracts on prediction markets are regulated derivatives, those contracts fall within the scope of the STOCK Act. The commission has previously stated that such contracts depend on the occurrence or non-occurrence of events with potential financial, economic, or commercial consequences.
By invoking both the CFTC’s regulatory authority and the ethics oversight role of the Office of Government Ethics, the lawmakers are seeking a coordinated response across the executive branch. The letter underscores broader concerns about the intersection of government access to sensitive information and the expanding reach of prediction market platforms. Whether the agencies will respond within the requested timeframe or take formal investigative steps remains to be seen.
Originally reported by CoinTelegraph.
