Dozens of Democrats urged US regulators to warn federal employees against insider trading on prediction markets following reports of suspicious bets tied to government actions.
More than 40 lawmakers asked the Commodity Futures Trading Commission and the US Office of Government Ethics to clarify that using non-public information to trade on platforms such as Polymarket and Kalshi is illegal.
“We ask that the CFTC and OGE issue guidance reminding federal employees of their existing legal obligation to refrain from using their insider governmental information to profit from prediction market trades,”
Lawmakers said in a March 29 letter.
The push follows reports of unusual trading activity that appeared to anticipate military actions and political events, raising concerns that insiders may have profited from privileged information.
Under US law, government officials are prohibited from trading on material non-public information, and lawmakers argue that prediction market contracts fall under regulated derivatives, making insider bets illegal.
The scrutiny comes as prediction markets expand rapidly and intersect with the crypto sector, drawing increased attention from policymakers working on broader digital asset regulation.
Regulatory pressure is also building beyond Congress, with prosecutors reportedly examining whether recent trades could trigger insider trading cases, signalling potential enforcement action ahead.