Washington: The White House has issued an internal warning to staff, cautioning them against using non-public government information to place bets on fast-growing prediction market platforms such as Kalshi and Polymarket.
According to reports, the email was circulated on March 24, just a day after US President Donald Trump announced a temporary pause on potential military strikes targeting Iran’s energy infrastructure. The timing of the advisory has drawn attention, coming with heightened scrutiny over suspicious trading activity linked to geopolitical developments.
Concerns over insider trading risks
The email referenced recent media reports that raised concerns about government officials potentially leveraging confidential information for financial gain through event-based betting platforms. These markets allow users to wager on real-world outcomes, including political decisions, military actions, and economic events.
White House spokesperson Davis Ingle dismissed allegations of wrongdoing, stating that any suggestion officials engaged in such activity without evidence is baseless and irresponsible. Davis Ingle reiterated that all federal employees are bound by strict ethics rules prohibiting the use of insider information for personal profit.
Surge in prediction market activity
Prediction markets have witnessed rapid growth, with billions of dollars traded globally. However, their rise has been accompanied by increasing regulatory and ethical concerns.
Recent incidents have intensified scrutiny. In one case, large volumes of trades were placed shortly before major geopolitical announcements, including developments involving Iran, raising questions about whether some traders had advance knowledge.
Separately, platforms like Polymarket have faced criticism after users reportedly made substantial profits by correctly predicting sensitive political or military outcomes shortly before official confirmations.
Lawmakers push for tighter regulation
The growing controversy has prompted calls from US lawmakers for stricter oversight. Members of Congress have urged regulators, including the Commodity Futures Trading Commission (CFTC), to investigate suspicious trades and address potential loopholes that enable insider betting.
Some legislators have even proposed banning prediction market bets related to war or military action, arguing that such practices could encourage the exploitation of sensitive information and undermine public trust.
Industry under pressure
Prediction market platforms are now under mounting pressure to improve transparency and monitoring systems. Regulators have also warned that insider trading laws apply to these markets, countering the perception that they operate in a legal grey area.
As the industry expands, the White House advisory highlights a broader concern, ensuring that government officials do not misuse privileged information in an increasingly complex and fast-moving digital trading environment.
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