The federal agency that regulates derivatives markets is ready to put the hammer down on prediction markets.
In his first public remarks since joining the Commodity Futures Trading Commission on March 2, David Miller, the agency’s new director of enforcement, made one thing clear: Curbing insider trading in prediction markets is a top priority.
“Unfortunately, there is a myth in the mainstream media and social media that insider trading law doesn’t apply in the prediction markets. That is wrong,” Miller said at an event at his alma mater, New York University School of Law, on Tuesday evening.
Prediction markets, namely Polymarket and Kalshi, have come under fire in recent months, after repeated occurrences of users making large bets before major geopolitical events. One anonymous Polymarket user made more than $400,000 after betting that then–Venezuelan President Nicolás Maduro would be toppled before the end of January, hours before U.S. forces captured him. Another Polymarket user has made nearly $1 million since 2024, correctly predicting U.S. and Israeli military actions against Iran, CNN reported.
“I have done a lot of work in insider trading matters both as a prosecutor and as a defense attorney, and I take insider trading extremely seriously,” Miller said. “We will aggressively detect, investigate, and where appropriate, prosecute insider trading in the prediction markets.” He added that his other priorities in the new role include curbing market manipulation (especially in the energy markets), disruptive trading, retail fraud, and violations of anti-money-laundering and know-your-customer laws.
Miller joined the CFTC from global law firm Greenberg Traurig, where he was a litigation shareholder and worked on cases including white-collar defense, government and internal investigations, and commodities and securities enforcement. He also served as an assistant U.S. attorney in the Southern District of New York for five years, including more than two years on the district’s securities and commodities fraud task force. He was also a technical advisor on the TV drama Billions.
Insider trading is “not a victimless offense,” and is often a violation of the duty owed to the information’s source, Miller said.
He later pointed to a recent example of Kalshi fining an employee who used nonpublic information to bet on a contract related to the YouTube channel he worked on. While Miller did not specify which YouTube channel, the situation he described is consistent with the fine Kalshi imposed on a MrBeast employee named Artem Kaptur, who was fined and ordered to return more than $5,000 in profits related to YouTube streaming milestones.
“Some have suggested that insider trading is inevitable or beneficial because it gives people with confidential information a financial incentive to trade on it, thus releasing the information to the public,” Miller later added. “These comments all suggest that insider trading is an important and acceptable part of the prediction markets ecosystem. Not so.”
On March 23, Kalshi and Polymarket each quickly added new industry guardrails and surveillance tools after Sen. Adam Schiff (D-Calif.) and Sen. John Curtis (R-Utah) announced legislation that would severely curtail the companies’ business by banning sports betting on the platforms. In response, Kalshi banned political candidates from trading on their own campaigns, and said it would block anyone participating in college or professional sports from betting on the events they are involved in.
