A federal regulator said he's coming for insider traders in prediction markets

A federal regulator said he's coming for insider traders in prediction markets

By

Jack Newsham

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Bloomberg/Getty Images

2026-03-31T23:56:30.196Z

• Insider trading on Kalshi, Polymarket and similar platforms is illegal, a regulator said.

• CFTC enforcement chief David Miller pushed back on the idea that insider trading is beneficial.

• He said he plans to hire more staff to bring cases.

Insider trading on prediction markets is illegal and could get perpetrators sued or land them in prison, the top enforcement lawyer at the Commodity Futures Trading Commission said Tuesday.

David Miller, who was named earlier this year as the enforcement chief for the federal finance regulator, said he will be hiring more staff to bring cases — and cut deals — with traders, including those active on new marketplaces like Kalshi and Polymarket.

"A myth has spread that insider trading is permissible, or even encouraged, in the prediction markets. Prominent individuals in finance, media, and particularly on social media, have contended that insider trading law does not apply to these markets," Miller said. "These comments all suggest that insider trading is an important and acceptable part of the prediction market ecosystem. Not so."

Miller's remarks come amid explosive growth in prediction markets, which offer "event contracts" on things like sports and cryptocurrency price movements. Kalshi said more than $1 billion was staked on its markets related to the Super Bowl, and activity on Polymarket's US platform jumped after it poured money into March Madness-related promotions.

David Miller, the CFTC enforcement chief

CFTC

The platforms' characterization of sports betting as a financial swap has allowed millions of Americans, including in states like Texas and California that have yet to legalize sports betting, to put money at risk based on the outcomes of athletic events. The companies behind prediction markets have underscored the ways they're different from traditional sportsbooks — for instance, by not banning high-performing users.

Speaking at an event at New York University's School of Law, Miller said insider trading, including on prediction markets, will be one of his top five priorities.

The other four are market manipulation, including in markets for gasoline and other fuels; market abuse, like spoofing and "wash trading" that sends misleading price signals to market participants; fraud schemes like pig-butchering that impact retail investors; and "willful violations" of know-your-customer and anti-money laundering rules by entities the CFTC regulates.

He also addressed reports that the CFTC has lost many enforcement lawyers. Barron's reported last month that every enforcement lawyer in its Chicago office, historically one of its largest, had left.

It's "not true" to say that there's no "cop on the beat" in commodities markets, Miller said. "We have sufficient personnel and resources. That being said, we are hiring."

He also said the CFTC will soon release a new, simpler cooperation policy — superseding one released 13 months ago — to give entities the CFTC regulates the opportunity to avoid penalties if they fully cooperate.

Miller's remarks come after Kalshi and Polymarket, the two biggest prediction market companies in the US, have tried to emphasize their own focus on curbing insider trading.

Earlier this year, Kalshi announced that it had taken action against a California politician who wagered on his own election and an editor for MrBeast who traded on markets related to the production. Miller referred to the latter case in his remarks.

More recently, Polymarket announced a new hard line against misusing confidential information on both its international and regulated US platform. Previously, its founder Shayne Coplan had said the potential for people to trade based on insider information was "cool."

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