Warren Tells CFTC to Keep Gov't Insiders from Cashing In on Polymarket

More than 40 Democrats in the U.S. Senate and House of Representatives sent a letter to the Commodity Futures Trading Commission and the U.S. Office of Government Ethics asking them to warn government officials that insider trading in derivatives is illegal — and that bets they make on prediction markets like Polymarket and Kalshi qualify under that category. Because apparently, some folks in Washington apparently thought "I have non-public intel on whether we'll bomb Iran" was just casual Tuesday afternoon research.

Senator Elizabeth Warren and Senator Cory Booker, the ranking Democrats on the Senate Banking and Agriculture Committees respectively, joined dozens of their colleagues in asking CFTC Chairman Mike Selig and the leaders of the Office of Government Ethics to issue guidance explaining that federal employees must refrain from insider trading in prediction markets. Warren, never one to let a regulatory grey area go un-litigated, apparently decided that if D.C. insiders wanted to gamble on geopolitical events, they'd have to do it the old-fashioned way: anonymously on a yacht in international waters like the rest of us degenerates.

The request was sparked by a wave of suspicious reports suggesting recent event contracts on government or military action seemed to attract bets from people with special insight into the outcomes. The suspected insider betting included contracts on military actions in Venezuela and Iran, the length of a press secretary's speech, and the firing of former Department of Homeland Security Secretary Kristi Noem. Yes, someone apparently had enough conviction to put money on how long Karoline Leavitt would talk. Either that's the most disciplined trader in existence, or someone's clearance was being used for very efficient market research.

U.S. derivatives laws already prohibit government officials from making trades based on non-public information obtained on the job. Since the CFTC has classified contracts at these prediction market firms as regulated derivatives, the lawmakers argued the ban should apply. In other words: you can't trade on what you hear in classified briefings, even if your trading desk is just Polymarket open in another tab while you nod along to a classified briefing about Taiwan.

The letter was also signed by Representative Angie Craig and Representative Maxine Waters, the top Democrats on the House Agriculture and Financial Services Committees, respectively. That's right — both the Agriculture Committee (which oversees the CFTC) and Financial Services Committee (which oversees everything else financial) wanted to make absolutely sure nobody in the federal government was treating the Department of Defense like their personal research desk for election betting.

Meanwhile, Selig's CFTC has been developing new policies to govern prediction markets, which are closely tied to the crypto industry. These lawmakers are also pushing the Digital Asset Market Clarity Act, which has