REPS LIEU & CASTEN URGE DOJ TO PROSECUTE INSIDER TRADING ON PREDICTION MARKET PLATFORMS

WASHINGTON D.C. — Congressmen Ted W. Lieu (D – Los Angeles County) and Sean Casten (D-IL) led 54 House Democrats in an effort to urge the Department of Justice (DOJ) to pursue suspected insider trading on prediction market platforms more aggressively.

“Trading on confidential, non-public information is illegal in traditional financial markets when it involves fraud, deception, or breach of duty. Failure to enforce these laws in the context of prediction markets risks creating a regulatory gap that rewards bad actors, incentivizes misconduct, and undermines confidence in the integrity of U.S. markets,” the lawmakers wrote. “...We therefore urge the DOJ to continue to take decisive action against individuals who exploit prediction markets using nonpublic information for personal gain, and to rigorously enforce corporate compliance by ensuring that platforms implement effective safeguards to detect and prevent illegal activity.”

Prediction markets have grown rapidly in scope and visibility, allowing users to wager on outcomes ranging from elections and sporting events to military actions, geopolitical developments, and major cultural events. As these markets become more prevalent, so too does the risk that individuals with access to confidential government, corporate, or event-related information may use that information for personal profit.

Recent events have underscored the need for stronger enforcement. There have been several high-profile incidents of suspected insider trading on prediction market platforms, including on both Polymarket and Kalshi. These incidents include suspiciously timed trades predicting U.S. military actions against Iran, the assassination of Iran’s Supreme Leader, performances at major cultural events, the outcomes of congressional elections, and the winner of the Nobel Peace Prize.

"The DOJ is poised to play an important role in addressing insider trading on prediction markets platforms, while U.S. financial regulators continue to divert their resources towards litigating against states and leave these abuses largely unaddressed," the lawmakers continued.

On April 23, 2026, the DOJ charged a U.S. servicemember with wire fraud for allegedly using classified information to make $400,000 from bets on Polymarket related to the U.S. military operation to remove Venezuela’s leader. This case highlights the significant national security, market integrity, and public trust risks posed when individuals allegedly exploit nonpublic information to trade on real-world events.  

In addition to Reps. Casten and Lieu, the letter was signed by Reps. Gabe Amo, Yassamin Ansari, Joyce Beatty, Janelle Bynum, Greg Casar, Ed Case, Maxine Dexter, Bill Foster, Valerie Foushee, Laura Friedman, Jesús García, Sylvia Garcia, Dan Goldman, Adelita Grijalva, Josh Harder, Jim Himes, Steven Horsford, Jared Huffman, Sara Jacobs, Pramila Jayapal, Hank Johnson, Raja Krishnamoorthi, Mike Levin, Zoe Lofgren, Stephen Lynch, Seth Magaziner, Sarah McBride, Betty McCollum, Kristen McDonald Rivet, Robert Menendez, Grace Meng, Seth Moulton,  Kevin Mullin, Eleanor Holmes Norton, Chris Pappas, Scott Peters, Chellie Pingree, Mark Pocan, Ayanna Pressley, Mike Quigley, Deborah Ross, Raul Ruiz, Andrea Salinas, Hillary Scholten, Brad Sherman, Dina Titus, Rashida Tlaib, Ritchie Torres, Juan Vargas, Bonnie Watson Coleman, George Whitesides, and Nikema Williams.

Text of the letter can be found below. A copy of the letter can be found here.

Dear Acting Attorney General Blanche:

We write to express serious concerns about potential insider trading on prediction market platforms. Federal anti-fraud and market manipulation laws apply to these platforms, just as they do to traditional financial markets. We urge the Department of Justice (DOJ) to further prioritize criminal investigations and civil actions targeting abuses in prediction markets to protect U.S. financial markets, investors, and the public from fraudulent conduct.

Recent suspected violations implicate significant geopolitical, sporting, and cultural events and risk creating perverse incentives for persons with access to confidential or classified information. For example, one anonymous trader has made nearly $1 million from dozens of suspiciously timed and accurate bets on military actions the U.S. has taken against Iran. Another trader with the username “Magamyman” made more than $550,000 from placing bets that Iran’s Supreme Leader would be removed, just before his assassination. In addition, ahead of the Super Bowl LX halftime show, unusually large trades were placed on Polymarket and Kalshi predicting that Lady Gaga and Ricky Martin would perform before there was any public confirmation. One social media user estimated that these suspected insiders made up to $3 million across multiple platforms. Lastly, the Nobel Institute is investigating a bet placed by a newly-created account on Venezuelan opposition leader María Machado winning the Nobel Peace Prize hours before the announcement, resulting in a profit of more than $50,000.

Trading on confidential, non-public information is illegal in traditional financial markets when it involves fraud, deception, or breach of duty. Failure to enforce these laws in the context of prediction markets risks creating a regulatory gap that rewards bad actors, incentivizes misconduct, and undermines confidence in the integrity of U.S. markets.

The DOJ has pursued several insider trading cases, including in coordination with U.S. financial market regulators, and criminally prosecuted individuals under federal wire fraud statutes. These cases include charging a Coinbase employee for tipping off others with insider information in order to trade cryptocurrencies, prosecuting Biotech’s CEO for misleading investors and engaging in insider trading in connection with Covid-19 and HIV drugs, and bringing charges against individuals who participated in an alleged insider trading scheme involving cancer treatment companies. The DOJ is poised to play an important role in addressing insider trading on prediction markets platforms, while U.S. financial regulators continue to divert their resources towards litigating against states and leave these abuses largely unaddressed.  

U.S. Attorney for the Southern District of New York Jay Clayton has stated that just “because it’s a prediction market, [it] doesn’t insulate you from fraud.” We appreciate that the DOJ recently took action against a U.S. soldier for allegedly using classified information to make profitable prediction market bets related to the U.S. mission that captured Venezuela’s leader.

At the same time, reports that the DOJ dropped its criminal investigation into Polymarket in July 2025, regarding whether the platform had been illegally serving U.S. customers, raise concerns about consistency in enforcement. Polymarket had previously been banned from the U.S. for operating as an unregistered platform and paid a $1.4 million civil penalty under a 2022 settlement agreement. Taken together, these developments risk undermining confidence in the DOJ’s commitment to also holding companies accountable for breaking the law.

We understand that this Administration is increasingly focused on gains in the U.S. stock market. That performance depends on integrity and accountability. We therefore urge the DOJ to continue to take decisive action against individuals who exploit prediction markets using nonpublic information for personal gain, and to rigorously enforce corporate compliance by ensuring that platforms implement effective safeguards to detect and prevent illegal activity.

Sincerely,