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undefined | House Democrats call on federal regulator to crack down on offshore prediction market war bets

House Democrats have sent a letter to Commodity Futures Trading Commission (CFTC) Chair Michael Selig demanding an explanation for the agency’s failure to curb offshore prediction‑market wagers on war and other government actions. The legislators, led by Reps. Jim McGovern and Seth Moulton, point to high‑profile cases of alleged insider trading tied to events such as the ouster of Venezuelan President Nicolás Maduro and the U.S.–Israeli strike on Iran, arguing that the CFTC’s existing rules and the Commodity Exchange Act give it clear authority to police such activity, including swaps that have a “direct and significant connection” to U.S. commerce.

The letter highlights the rise of platforms like Kalshi, a U.S.‑based exchange that claims to prohibit controversial bets, and Polymarket, an offshore service that has hosted headline‑making contracts despite limited U.S. access. Both firms have recently introduced self‑imposed safeguards against insider trading, but Democrats contend that more robust federal oversight is needed, especially for overseas trades that affect U.S. markets. The lawmakers also query whether the CFTC has been made aware of potential conflicts of interest involving market participants and members of the executive branch, noting that Donald Trump Jr. serves as an investor and unpaid advisor to Polymarket and as a strategic advisor to Kalshi.

In parallel with the CFTC inquiry, Congress is drafting a wave of bills designed to tighten regulation of prediction markets, ranging from measures that specifically target insider‑trading risks to broader proposals that would ban event contracts related to sports, government actions, and warfare. The CFTC has recently sued several states—Arizona, Illinois and Connecticut—over their attempts to regulate these platforms, asserting that such authority belongs to the federal government. Democrats are pressing for a swift response from Selig by mid‑April, warning that unchecked “corrupt trades” threaten market integrity and public confidence.