Lynnae Williams Journalist
Lynnae is a journalist covering the intersection of technology, culture, and gambling. She has more than five years of experience as a writer and editor, with bylines at SlashGear and MakeUseOf. On the iGaming side,...
Read Full BioAs the debate over insider trading appears on the brink of becoming a full-blown crisis for prediction markets, the trade group that represents them has responded with a full-page ad in The Washington Post that seeks to set the record straight about these platforms.
In the ad, which ran on Wednesday, the Coalition for Prediction Markets went on the offensive, defending federally regulated platforms as part of a high-profile, government relations initiative. The campaign centers on drawing a bright line in the sand between U.S.-based exchanges and their offshore counterparts.
The coalition, which represents some of the biggest names in the prediction market industry, including Kalshi, Coinbase, Underdog, Crypto.com, and Robinhood, is using the campaign to advocate for working with Congress and reassure the public that regulated platforms already have strict bans against the use of nonpublic information.
The ad outlines the differences between regulated and unregulated prediction markets, noting that the Commodity Futures Trading Commission (CFTC) oversees U.S.-based platforms. The emphasis on customer vetting and explicit insider trading prohibitions in the ad is part of the coalition’s effort to steer the conversation about prediction markets as state and federal lawmakers weigh new restrictions.
A spokesman for the group described the ad to Business Insider as an “opening salvo” in a campaign for consistent federal regulations as prediction markets face opposition in several states. “The coalition plans to spend seven figures in the coming months in coordination with its government relations outreach,” the spokesperson told the publication.
Suspicious Activity On Offshore Platforms Fuels Debate
Prediction markets have come under intense scrutiny in recent weeks, following several controversial trades that appeared to be made by insiders with access to nonpublic information. The most highly publicized case was connected to the U.S. intervention in Venezuela, which led to the capture of the country’s President Nicolás Maduro.
In the hours leading up to Maduro’s arrest by U.S. Special Operations Forces, a newly created wallet placed a series of bets on his removal from office on Polymarket, earning over $400,000 on an initial wager of a little more than $30,000. The fact that only a small circle of government officials and select media outlets knew about the raid in advance led to widespread speculation that an insider had placed the bets.
Outside the U.S., a similar case in Israel received attention after a bettor on Polymarket correctly predicted the timing and scope of military strikes against Iran in June 2025, resulting in a $150,000 profit and speculation that someone with insider knowledge had placed the timely wager. Israeli security agencies are working to determine whether classified information was leaked in that case.
Suspicious trades on prediction platforms haven’t been limited to geopolitical events. In late 2025, a Polymarket user was accused of being a company insider after netting $1 million by correctly predicting Google’s “Year in Search” rankings before they were released.
All of the trades in question were placed on Polymarket’s international platform, which isn’t regulated by the CFTC, a distinction that the Coalition for Prediction Markets is highlighting to distance itself from the recent scandals involving unregulated, offshore platforms.
Lawmakers Push New Bills Targeting Insider Trading
In an effort to address what many see as a regulatory loophole, lawmakers have introduced legislation to prohibit insider trading on prediction markets. Rep. Ritchie Torres (D-NY) is leading the push at the federal level with the Public Integrity in Financial Prediction Markets Act of 2026, which he introduced just a week after Maduro was detained.
If passed, the bill would make it a crime for federal officials, including members of Congress and political appointees, to trade on event contracts related to government policy or political outcomes if they “possess material nonpublic information” or “may reasonably obtain such material nonpublic information in the course of performing official duties.”
In New York, Democratic Assemblymember Phil Steck introduced Assembly Bill A09635, which would bar state employees, lawmakers, and legislative staff from using privileged information to participate in prediction markets or sportsbooks. This bill lists several platforms, including Kalshi, PredictIt, and Robinhood, as off-limits to public officials if they have insider knowledge of an event.
While the Coalition for Prediction Markets says these activities are already banned on CFTC-regulated platforms, these legislative efforts make it clear that lawmakers aren’t convinced and want to ensure these rules are codified to discourage insiders from using their knowledge to trade on these platforms.
