Trump’s top regulator for prediction markets pledges crackdown on insider trading

By Marshall Cohen, CNN

Washington (CNN) — The top federal regulator for the rapidly growing prediction market industry vowed Thursday to crack down on insider trading, and said his agency is actively investigating hundreds of possible cases.

Commodity Futures Trading Commission chairman Michael Selig, who was appointed by President Donald Trump, tried to allay rising and bipartisan concerns about prediction markets, where traders can bet on everything from sports to elections, entertainment, the weather and sometimes even war.

“I want to be crystal clear to anyone who engages in fraud, manipulation, or insider trading in any of our markets: we will find you, and the full force of the law will come to bear,” Selig told the House Agriculture Committee.

He said the CFTC currently has “hundreds or thousands of investigations ongoing” but declined to provide a specific number. A person familiar with the matter later clarified that the agency has hundreds of open investigations right now and said it receives thousands of tips from the public each year.

This was Selig’s first time testifying to Congress after taking the reins at the CFTC in December. As chair, he has championed the prediction market industry, which is currently dominated by rivals Kalshi and Polymarket.

Experts have repeatedly flagged possible insider activity on Polymarket after seeing remarkably accurate and well-timed lucrative trades before US and Israeli strikes on Iran and before the US captured Venezuela’s leader in January.

Kalshi doesn’t offer bets on war, but the company refunded all losses from a disputed market about the tenure Iran’s supreme leader. (CNN has a partnership with Kalshi and uses its data to cover major events. However, editorial employees are prohibited from participating in prediction markets.)

Democrats pressed Selig on whether he would investigate suspicious activity if it came from White House officials, Trump family members or Republicans.

“We take enforcement absolutely critically seriously,” Selig said, adding that the agency has a “zero tolerance policy” for insider trading.

There is no public evidence connecting Trump, his family members or any Trump administration officials to dubious trades on prediction markets.

The White House issued a reminder to all staff last month that using information from their government jobs to make money on prediction sites is illegal. A White House spokesperson has said it is “baseless and irresponsible” to suggest that employees are engaging in insider trading.

Donald Trump Jr. is an adviser to Kalshi and an investor in Polymarket, which was approved by the CFTC last year to operate in the US. A spokesman for Trump Jr. previously told CNN that he doesn’t trade on prediction platforms and doesn’t lobby federal officials on behalf of either of these companies.

At the hearing, Selig said he knew about Trump Jr.’s roles with Polymarket and Kalshi. But he dodged when Democratic Rep. Jim McGovern asked him to acknowledge that the Trump family “has a financial stake in how these markets are regulated,” which ethics experts say is a conflict of interest.

“It’s the definition of corruption,” McGovern said. “And I think your actions to deregulate this market are helping them do it. And I think it is wrong.”

Selig criticized McGovern for “playing speculative games” but added that “we do not engage in favoritism or bring politics into any of these matters.”

Other Democrats said the CFTC was understaffed and ill-equipped to crack down on a growing industry with billions of dollars in weekly trades. Some Democratic lawmakers also pointed out that Trump hasn’t nominated anyone else to fill vacanies and join Selig, leaving him alone on the five-seat commission.

“I’m sure you’ll follow the law and that you have a level of integrity, but no one has determined that you are Solomon-like nor a king,” said Rep. Jim Costa, a California Democrat. “And I think it’s inappropriate to have one person, as much as you’ll try to be attentive, to make these determinations when the law was very clearly intended to be a bipartisan representation.”

While Selig was on Capitol Hill, top CFTC lawyers were at a federal appeals court in California for a major hearing about the legality of prediction sites.

The CFTC argued that Kalshi and other companies offer financial products that can only be regulated by the federal government – and not the states. Nevada and nearly 40 states say the products are indistinguishable from gambling, especially for sports markets and should be subjected to state gaming laws

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