The Letter and What It Asks
On April 7, 2026, seven members of the U.S. House of Representatives led by Representatives Seth Moulton and Jim McGovern of Massachusetts sent a formal letter to CFTC Chair Michael Selig demanding the agency explain its inaction on insider trading in prediction markets and event contracts tied to U.S. military operations.
The lawmakers acknowledged upfront that the CFTC has jurisdiction — affirming Selig’s own position that prediction market event contracts fall under the Commodity Exchange Act as swaps. But they drew a sharp distinction between jurisdiction and enforcement. The CFTC, they argued, has authority and has not used it.
The letter specifically named event contracts tied to U.S. military actions in Iran and Venezuela, calling them “morally obscene.” It cited an existing CFTC rule that prohibits the listing of contracts that “involve, relate, or reference terrorism, assassination, war, gaming, or an activity that is unlawful under any State or Federal law.” The lawmakers asked why that rule had not been applied. The deadline for Selig’s response to all six questions: April 15, 2026.
“It is morally corrupt and completely unacceptable for these platforms to allow people to bet on whether American service members live or die. The CFTC has the authority to stop this, and we want to know why it hasn’t.” — Rep. Seth Moulton
The Incidents That Triggered the Letter
The congressional pressure did not emerge from abstract policy concerns. It was triggered by a series of specific, documented trades that raised insider trading alarms going back to January 2026.
In early January, a prediction market user made $400,000 betting on the capture of former Venezuelan President Nicolás Maduro by U.S. forces — placed at odds that implied the user knew the outcome before the public did. Days later, prediction market users accurately projected that a White House press briefing would end abruptly before a 65-minute threshold, profiting when the secretary ended the session 30 seconds before the mark.
In March, a trader identified as “Magamyman” made $553,000 on a contract related to the death of Iran’s supreme leader. Anonymous bettors made large, well-timed trades on the Iran strike hours before it became public, in patterns Bloomberg described as the “hallmark” of insider trading. Israeli authorities launched their own investigation. On April 7 itself, the day the congressional letter was sent, wallets made approximately $663,000 on ceasefire contracts when the probability of a truce was between 2.9% and 10.3%.
A separate incident drew bipartisan attention: a prediction market briefly listed a contract on whether two U.S. airmen shot down over Iran would be rescued by a specific date. The platform removed it immediately and acknowledged it had “slipped through” internal safeguards. Both crew members were recovered.
The CFTC’s Response and What It Reveals
CFTC Enforcement Director David Miller addressed the insider trading question directly in the days before the congressional letter, in what appeared to be a preemptive response to building pressure. His message: the commission is watching, it does consider insider trading laws to apply to prediction markets, and it will act — but selectively.
“There’s a myth in mainstream media and social media that insider trading doesn’t apply in the prediction markets. That is wrong.” — David Miller, CFTC Enforcement Director
Miller said the agency would pursue cases “against those who tip or trade with misappropriated information” but would not dedicate enforcement resources to “trivial” cases. He provided no timeline, named no investigation, and did not address any of the specific incidents lawmakers had cited. The statement confirmed jurisdiction without announcing action — exactly the gap the congressional letter was designed to put on the record.
The Broader Regulatory Landscape
The congressional letter lands during an active legal dispute over who has authority to regulate prediction markets at all. Chair Selig has been aggressive in defending the CFTC’s exclusive federal jurisdiction against state gaming authorities. The agency recently sued Arizona, Illinois, and Connecticut after they issued cease-and-desist orders to prediction market platforms for allegedly operating illegal gambling operations without state licenses.
A federal appeals court sided with the federal position last week: the U.S. Court of Appeals for the Third Circuit blocked New Jersey gaming authorities from pursuing enforcement actions, with two of three circuit judges finding the platforms had a “reasonable chance of success” in arguing that federal commodities law preempts state authority.
The political context complicates the CFTC’s position further. Donald Trump Jr. is an investor in and unpaid advisor to one of the major prediction market platforms, and a strategic advisor to a second. The Trump family’s social media company has announced its own prediction market product. Lawmakers explicitly asked in the letter whether the CFTC had been made aware of “any conflicts of interest between major market participants and family members of Executive Branch officials, including the President of the United States.” That question, alone, reflects how far outside standard commodity regulation this debate has moved.
