Seven members of the US House of Representatives have sent a formal letter to Commodity Futures Trading Commission Chair Michael Selig, pressing the agency to explain its handling of suspected insider trading on prediction markets and event contracts linked to wars and military conflicts. The letter, dated Monday, raises pointed questions about the CFTC’s willingness and capacity to police these markets. Lawmakers set a deadline of April 15 for Selig to respond to six specific questions.
The representatives acknowledged that the CFTC holds authority under the Commodities Exchange Act to apply its rules to prevent evasion of the law’s underlying swap provisions, effectively affirming Selig’s view that the commission has jurisdiction over prediction markets. Despite this, the lawmakers expressed serious concern about how the agency is supervising what they described as ‘morally obscene’ event contracts. Among the examples cited were contracts tied to US military actions in Iran and Venezuela, where suspicious trades appeared connected to the timing and outcomes of military involvement.
‘Such corrupt trades deserve swift and decisive oversight,’ the letter stated. The representatives warned that allowing these contracts to continue raises troubling questions about the commission’s commitment to fulfilling a global regulatory role. The letter signals growing congressional frustration with the pace and scope of CFTC enforcement in this area.
The broader regulatory landscape surrounding prediction market platforms remains contested at both federal and state levels. Companies such as Kalshi and Polymarket face lawsuits from several US state gaming authorities, which allege the platforms are illegally offering sports bets. At the federal level, the CFTC under Selig contends that the event contracts offered on these platforms constitute swaps and therefore fall under federal commodities regulations.
In one of the most recent court decisions, the US Court of Appeals for the Third Circuit upheld a lower court ruling that blocked New Jersey gaming authorities from pursuing enforcement actions against Kalshi. Two of the three circuit judges found that Kalshi had a reasonable chance of success in arguing that federal commodities law takes precedence over state authority, a significant development for the industry.
The Monday letter also followed remarks by CFTC enforcement director David Miller, who addressed concerns about insider trading on these platforms. Miller indicated the commission would pursue cases only against individuals who tip others or trade using misappropriated information, and said the agency would not dedicate resources to cases it considers trivial. His comments have drawn criticism and prompted Democratic lawmakers to propose related legislation aimed at strengthening oversight of prediction market trading.
Originally reported by CoinTelegraph.
