White House warns staff against prediction market insider trading
CBS News obtained the email, which warned that ethics rules prohibit government employees from using nonpublic information for their own benefit or that of others, and specified that negotiating such contracts carries criminal penalties. Staff were asked to contact the White House Counsel’s Office for advice.
The warning came a day after President Donald Trump posted an announcement on Truth Social about a pause in strikes against Iran. About 15 minutes before that announcement, according to CBS News, a flurry of activity hit the futures markets. According to Dow Jones Market Data, oil futures totaling more than $760 million were traded in less than two minutes.
David Ingle, a White House spokesman, verified that the email was authentic and quoted Trump as saying he had been “absolutely clear” that officials should not exploit nonpublic information for personal financial gain. Any reporting suggesting that White House officials acted inappropriately was dismissed by Ingle as “baseless and irresponsible.”
A senior administration official told the Wall Street Journal that the email amounted to a timely “reminder,” noting that unusual bets in futures markets had become “hot in the news.” The White House said there was no evidence that anyone in the administration used inside information to place well-timed bets.
According to the Wall Street Journal, a group of three Polymarket accounts raked in more than $600,000 by accurately betting on when the Iranian ceasefire would happen.
This episode intensified the growing backlash against prediction market platforms such as Kalshi and Polymarket, which allow users to bet on global events and cash out anonymously. Democrats in Congress have argued that the current regulatory framework leaves too many loopholes, especially since significant amounts of money can be made on these platforms without any public disclosure. Legislation proposed last month by Senators Richard Blumenthal and Andy Kim would prohibit predictive market contracts related to armed conflict or military operations. Kim said that “corruption and exploitation currently thrive in the gaps and flaws of prediction markets.”
Trade with Iran is not the first to raise concerns. A Polymarket account called “Magamyman” turned an $87,000 bet into more than $553,000 by betting on U.S. strikes against Iran approximately 71 minutes before news of the attacks became public. Blockchain analytics firm Bubblemaps identified six accounts it described as suspected insiders that collectively made $1.2 million on Polymarket before the strikes. Earlier this year, a Polymarket punter raked in more than $400,000 after betting on the ouster of Venezuelan President Nicolás Maduro – a bet placed less than five hours before his capture.
Prediction markets are regulated by the Commodity Futures Trading Commission. Existing ethics regulations prohibit federal employees from using government information to enrich themselves, and separate rules restrict gambling on federal grounds.
