Prediction markets fuel insider betting as US regulators intensify scrutiny

The rise of prediction markets has spawned a new wave of profiteering in Washington. With the Trump administration advancing policies at a rapid pace, insiders privy to government affairs have been able to speculate and profit from market fluctuations. Now, regulatory agencies and judicial departments are stepping up their efforts, rigorously investigating suspicious betting activities across various federal government departments. This presents an unprecedented challenge for regulators, as existing insider trading laws were not originally designed to target individuals betting on legislative outcomes, political elections, or even the results of U.S. military operations.According to informed sources, in recent months, regulators have repeatedly requested information from two major prediction trading platforms, Kalshi and Polymarket, focusing their reviews largely on bets related to political events and U.S.-Iran and U.S.-Venezuela military developments. Last month, a Special Forces soldier was arrested for allegedly betting on the ousting of Venezuelan leader Nicolás Maduro. This case highlighted the significant risks posed when public officials use their positions to plan or oversee matters related to insider betting. Officials from the U.S. Department of Justice and the Commodity Futures Trading Commission have stated that additional enforcement actions will follow.