Washington's Crystal Ball Problem: 42 Lawmakers Tell Feds to Keep Their 'Insider Info' Off Polymarket

Forty-two Democratic lawmakers have fired off a letter to the Commodity Futures Trading Commission (CFTC) and the Office of Government Ethics, demanding guidance to prevent federal employees from using inside knowledge to trade prediction markets. Apparently, the only thing more dangerous than a congressman with a 401(k) is one with access to Polymarket.

The letter, addressed to CFTC Chair Mike Selig, cites "multiple incidents" fueling "speculation about possible insider trading in prediction markets by federal employees." The lawmakers want executive branch-wide guidance clarifying that federal workers must refrain from insider trading in these markets. Because nothing says "draining the swamp" like outlawing the swamp's residents from getting ahead on their own predictions.

Prediction markets allow users to trade contracts on future event outcomes. Two major platforms—Kalshi and Polymarket—have announced plans to introduce guardrails as scrutiny intensifies. It's giving "too big to jail" energy, but for the politically connected.

Among the incidents flagged: users who bet on the capture of Venezuelan leader Nicolás Maduro, and others wagering on the length of White House press secretary Karoline Leavitt's speech on Jan. 7. The letter also noted suspicious trades related to "the invasion of Iran and the death of Ayatollah Khamenei," raising national security concerns about potential attack signaling, and whether former DHS Secretary Kristi Noem would be fired. Nothing says "trust in government" like watching officials profit off their own administration's next move.

Lawmakers argue the 2012 STOCK Act is being violated. The act, signed by former President Barack Obama, prohibits government officials from using material, nonpublic information for personal gain. The letter contends that since the CFTC classifies prediction market contracts as regulated derivatives, they fall under the STOCK Act's insider trading prohibition. Apparently, "I have access to classified briefings" is not an acceptable DeFi strategy.

"The CFTC has determined that event contracts are derivatives that depend on the occurrence or non-occurrence of an event with a potential financial, economic, or commercial consequence," the lawmakers wrote. "Thus, the CEA's prohibition on government officials engaging in insider trading also applies to such activity in prediction markets." In other words, even your government's insider information can't beat the market—at least not legally.

The group has requested a briefing and answers by April 13, including whether the CFTC has investigated or received reports of federal employees engaging in insider trading on prediction markets, and what steps are being taken to detect and prevent such activity. So basically, they're asking the CF