House Democrats Urge CFTC on Prediction Market Enforcement

Seven members of the U.S. House of Representatives, all Democrats, have urged the Commodity Futures Trading Commission to explain its limited enforcement against alleged insider trading in prediction markets linked to sensitive geopolitical events, including U.S. military actions.

In a letter dated April 6 to CFTC Chair Michael S. Selig, the lawmakers expressed concern over event contracts on platforms such as Polymarket and Kalshi that allow bets on outcomes like U.S. involvement in conflicts in Iran and Venezuela. They described these contracts as "morally obscene" and argued that the CFTC has clear authority under the Commodity Exchange Act to prevent evasion of rules governing swaps, even for trades occurring outside the United States if they affect U.S. commerce. The group, led by Representatives Seth Moulton of Massachusetts and Jim McGovern of Massachusetts, requested responses to six specific questions by April 15, including details on the agency's awareness of potential conflicts of interest involving government officials and market participants.

The letter highlighted recent suspicious trades, such as a Polymarket user who reportedly profited $436,000 in January by...