The CFTC’s top enforcement official issued a stark warning to prediction market traders Tuesday, stating that insider trading violations will be prosecuted.
David Miller, the agency’s enforcement director, emphasized that event contracts function as swaps under securities law, not games.
"We are watching," Miller said at a New York University panel. "Insider trading laws apply here."
His remarks follow increasing scrutiny after major trades preceded U.S. political events, such as Donald Trump’s announcements and the capture of Venezuelan leader Nicolás Maduro.
In response, platforms Kalshi and Polymarket have updated rules to combat misconduct.
Legislation like the Public Integrity in Financial Prediction Markets Act of 2026 is also being considered to regulate insider trading by government officials.
The CFTC is under pressure to enforce stricter standards, especially regarding federal employee participation in prediction markets.