Democratic lawmakers say prediction markets should be warned about insider trading…targeting Polymarket and Kalshi

U.S. Democratic lawmakers, citing concerns over potential insider trading in prediction markets, called on regulators to issue warnings.

According to CoinDesk on the 30th (local time), about 40 Democratic members of Congress sent a letter to the Commodity Futures Trading Commission (CFTC) and the Office of Government Ethics (OGE), asking them to clearly inform federal employees that insider trading is illegal when trading on prediction markets.

The request reflects the view that because event contracts traded on platforms such as Polymarket and Kalshi are classified as derivatives, trading based on nonpublic information is likewise prohibited under existing derivatives regulations.

Lawmakers in particular pointed to the possibility that individuals with advance information may have placed bets in contracts tied to military operations and government policy. They said suspicious trading had been detected in contracts related to Venezuelan and Iranian military action, the White House briefing schedule, and changes in government personnel.

Signatories included prominent figures such as Sen. Elizabeth Warren of the Senate Banking Committee, Sen. Cory Booker of the Agriculture Committee, and Rep. Maxine Waters of the House Financial Services Committee.

Meanwhile, the CFTC is reportedly reviewing policies to establish a regulatory framework for prediction markets.