US Senators Demand Answers from CFTC on Regulation of Prediction Markets
Senators Raise Concerns Over Prediction Markets
A group of 12 United States senators have jointly addressed the Commodity Futures Trading Commission (CFTC), seeking clarity on the agency’s approach to regulating insider trading and fraud within prediction markets. These markets allow participants to bet on real-world events, but questions have emerged about their oversight and legality.
Focus on Platforms Like Polymarket
The lawmakers’ attention centers on platforms such as Polymarket, which enables betting on events ranging from politics to sports. Recent activity on Polymarket, including unusual trading patterns, has sparked allegations of illegal gaming practices.
Specifically, trading concerning Venezuelan President Nicolás Maduro raised red flags. Shortly before announcements of Maduro’s capture, a new account reportedly invested $30,000 on his removal, resulting in winnings exceeding $436,000 after the event was publicized. Additionally, Polymarket listed a contract late at night questioning whether Maduro would be in U.S. custody by month-end, with trading volume peaking at $1.3 million.
The senators expressed concerns that such suspicious trades occurring on an unregistered platform indicate a lack of protections against insider trading. They highlighted the potential risks these unregulated markets pose, including implications for national security.
Senators Seek Detailed Responses from CFTC
The letter addressed to CFTC Chair Michael Selig is signed by Elissa Slotkin, Richard Blumenthal, Cory Booker, Catherine Cortez Masto, John Hickenlooper, Andy Kim, Jeff Merkley, Alex Padilla, Jacky Rosen, Adam Schiff, Chris Van Hollen, and Peter Welch. The senators urge immediate attention to the issue of insider trading facilitated through event-based financial contracts.
They inquire whether similar contracts exist on regulated exchanges, how the CFTC monitors irregular activity, and what measures will be taken to ensure full regulatory compliance by Polymarket US upon its official launch. The senators also ask about enforcement mechanisms for anti-manipulation laws and collaboration with state-level regulators.
Request for Comprehensive Oversight Beyond Individual Platforms
The senators have set a deadline of February 9, 2026, for a comprehensive response from the CFTC, emphasizing the seriousness of these concerns. Representative Slotkin stressed that the issue extends beyond a single platform, highlighting the need for U.S. law to provide safeguards against manipulation and insider trading across all financial markets, including emerging event-based contracts.
She underscored the significance of maintaining market integrity and protecting national security. This letter follows a recent appeal from industry groups like the American Gaming Association and the Indian Gaming Association, who have requested a ban on contracts related to sports events.
