The White House warned its staff against using their insider knowledge to place well-timed bets on sites such as Polymarket in a March 24 staff-wide email, the Wall Street Journal reported last week.
Polymarket is the world’s largest decentralized prediction market, allowing users to trade shares by betting on the outcomes of real-world events, such as politics, economics, and sports, with prices reflecting real-time, crowd-sourced probabilities.
It serves as a forecasting tool and often provides faster, more accurate information than traditional polls.
Calls are coming from Congress for investigations into the prediction market after the latest instance in which groups of traders placed bets on major geopolitical events in the hours before they happened.
On Tuesday, April 7, several significant bets were placed on a US-Iran ceasefire by new accounts, shortly before President Trump announced the ceasefire, the Associated Press reported.
This is not the first instance of accounts placing large bets in the hours leading up to major geopolitical events, at the outbreak of the Iran war one Polymarket user won almost $200,000, having bet on February 28 as the date of the Israeli-US attack on Iran.
Responses from US officials
Congressman Richie Torres sent a letter to Michael Selig, Chairman of the Commodity Futures Trading Commission, calling for an immediate investigation into suspicious trading activity on Polymarket in the hours before President Trump announced a US-Iran ceasefire.
“This pattern raises serious concerns that certain market participants may have had access to material nonpublic information regarding a market-moving geopolitical event. The use of newly created wallets, combined with the precision and timing of these trades, raises serious red flags,” explained Torres.
He added that “Whether these trades reflect unlawful insider activity or sophisticated speculation, the appearance of potential market abuse at this scale demands immediate transparency.”
“Failure to act risks undermining confidence in both emerging financial technologies and the broader integrity of US markets.”
On Thursday, April 9, Senator Richard Blumenthal sent a letter to Polymarket, demanding an explanation of why the company allows trades on war and violence, and whether it is making any efforts to minimize insider trading.
“These repeated, illicit bets raise significant concerns about the mishandling of confidential information on Polymarket, and call into question whether it is taking adequate steps to prevent, deter, and report national security leaks and gambling over matters of life and death,” said Blumenthal.
There are at least two bills calling for bans on these sorts of bets pending in Congress, in both the House and the Senate.
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