(AsiaGameHub) – Congress kicked off the week by maintaining its focus on insider trading in prediction markets, shifting its gaze to the regulator overseeing event contract exchanges and the government office tasked with ensuring federal employees adhere to ethics rules and conflict-of-interest guidelines.
On Monday, Senator Elizabeth Warren (D-MA), along with 41 other legislators, revealed they had dispatched a letter to Commodity Futures Trading Commission (CFTC) Chairman Michael Selig and division heads at the U.S. Office of Government Ethics (OGE), calling for action against what they termed “illegal insider trading in prediction markets by federal employees.”
Dated March 29, the letter requested that the CFTC and OGE release government-wide guidance cautioning federal employees against using nonpublic information to trade in prediction markets.
To illustrate their point, the letter cited multiple instances of alleged insider trading, such as the January U.S. military intervention in Venezuela that resulted in the capture of former leader Nicolás Maduro—an event where traders earned hundreds of thousands of dollars via well-timed wagers.
They also referenced a market focused on the duration of White House Press Secretary Karoline Leavitt’s press conference remarks; traders gained profits when she ended her speech abruptly, just 30 seconds shy of the 65-minute mark.
The most recent cases they highlighted included the joint U.S.-Israeli strike on Iran (where alleged insiders made over a million dollars) and speculation about when Department of Homeland Security Secretary Kristi Noem would be dismissed.
The legislators have requested a staff-level briefing and responses to the issues outlined in the letter by no later than April 13.
Lawmakers Demand Accountability & Clear Guidance
In the letter, the lawmakers contend that the Commodity Exchange Act—amended by the 2012 Stop Trading on Congressional Knowledge (STOCK) Act—already prohibits federal employees from using nonpublic information to trade in prediction markets.
The STOCK Act makes it illegal for government workers to use nonpublic information obtained during their official duties for personal profit in futures, options, or swaps—categories the CFTC identifies as including event contracts.
Given these existing rules, the legislators assert that the CFTC and OGE should distribute formal guidance to remind government employees that their STOCK Act obligations extend to trading in prediction markets.
The letter links this issue directly to the CFTC’s rulemaking process for event contracts, which began on March 12. It notes that the commission is actively soliciting public input on how insider trading concerns should influence the future regulation of prediction markets.
The legislators brought up this issue because the CFTC’s advance notice specifically queries how federal employees’ use of nonpublic information should guide the commission’s approach to prediction markets.
January Letter Raised Similar Insider Trading Questions
This isn’t the first occasion legislators have voiced their concerns about insider trading to the CFTC. In January, Senator Catherine Cortez Masto (D-NV) and a smaller group of senators sent a letter to Selig inquiring how the CFTC monitors suspicious event contract trading and whether it has ever investigated insider trading in those markets.
Cortez Masto, Chris Van Hollen (D-MD), Jacky Rosen (D-NV), Andy Kim (D-NJ), Jeff Merkley (D-OR), Cory Booker (D-NJ), and John Hickenlooper (D-CO) signed both letters—indicating these senators are not satisfied with the responses they’ve gotten from the CFTC so far.
Even if the senators manage to get the CFTC and OGE to take action, it’s uncertain how effective enforcement will be in reality. In their latest letter, the legislators cite the STOCK Act as evidence that insider trading is already illegal, but critics have long doubted the statute’s practical impact. The STOCK Act has been in effect for over a decade, yet there’s no public record of officials paying statutory fines for disclosure mistakes or any successful criminal prosecutions under the law.
This raises the question of whether the ongoing discussion on Capitol Hill about insider trading is merely performative and a response to public anger, or if legislators truly view insider trading in prediction markets as a real danger.
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