Reports of big payouts from market trades that appeared to foresee major actions by the Trump administration – potentially with insider information – are becoming increasingly common.
Last week, the oil futures market saw a spike in trades about 15 minutes before President Donald Trump announced a pause in plans to attack Iranian power plants. The unidentified trader or traders had placed more than $500 million in trades, according to calculations by the Financial Times.
Similarly, the prediction market Polymarket saw a sharp increase in bets that proved lucrative right before the United States went to war against Iran and, earlier, invaded Venezuela.
Why We Wrote This
Critics say traders appear to be getting confidential information about major news that will move markets, and then placing trades just before it happens, winning a big payoff. Suspicions of impropriety have sparked a wave of legislation in both houses of Congress.
Critics say these well-timed, anonymous market plays strongly suggest insider trading from people either in or close to the Trump administration. They charge that traders appear to be getting confidential information about major news that will move markets, and then placing trades just before it happens, winning a big payoff.
“This is just astounding corruption,” Democratic Sen. Chris Murphy of Connecticut said in a social media video. “There are a bunch of millionaires and billionaires in this country who are making money off of their inside information, their access to what President Trump is going to do or what he is going to say.”
The White House denies any wrongdoing by administration officials.
“The only focus of President Trump and Trump administration officials is doing what’s best for the American people,” says deputy White House press secretary Kush Desai in a statement. “The White House does not tolerate any Administration official illegally profiteering off of insider knowledge, and any implication that officials are engaged in such activity without evidence is baseless and irresponsible reporting.”
Suspicions of impropriety have sparked a wave of legislation, some of it bipartisan, in both houses of Congress. Senator Murphy, along with Rep. Greg Casar of Texas, another Democrat, has introduced a bill aimed at banning prediction markets from “wagering on government actions, terrorism, war, assassination, and events where an individual knows or controls the outcome.”
But some experts say new laws are unlikely to fix the problem.
“Insider trading is already illegal,” says Todd Phillips, an assistant professor of law at Georgia State University’s business school. Enforcement is the real issue, he suggests.
The Commodity Futures Trading Commission, which governs U.S.-based prediction markets in addition to commodity futures markets, has a dearth of enforcement attorneys, according to Barron’s. And the CFTC only has jurisdiction in the U.S., while most of Polymarket’s business is offshore.
The CFTC approved a U.S.-facing site last year, which is still not fully operational. But Americans can use a virtual private network, or VPN, to access the offshore site – and operate free of government regulation.
Concern about prediction markets and conflicts of interest has revived calls for a ban on stock trades by members of Congress. And it has put additional scrutiny on President Trump’s soaring personal fortune, now estimated at $6.5 billion, and up $1.4 billion from March 2025, including gains from his cryptocurrency ventures and licensing business. Last week, a Justice Department memo revealed that the classified documents Mr. Trump was charged with illegally retaining in 2021, in a case that was later dismissed, had been related to his business interests.
To some ethics experts, it all underscores an alarming erosion in norms preventing public officials from profiting off government work or connections – norms intended to reassure voters that their officials were putting the interests of the country ahead of their own. Today, just 17% of the U.S. public trusts the federal government to do what is right for the country, down from 77% in 1964, according to the Pew Research Center.
Other analysts say the problem is broader – and symptomatic of a government that has simply grown too powerful and too entwined with the economy and markets.
“The underlying problem is not the insider trading, it’s public corruption,” says Adam Michel, an economist at the libertarian Cato Institute. “It’s the fact that government has inserted itself so deeply into so many different markets and has so much influence on market outcomes.”
Polymarket and Kalshi, another prediction-market platform, both took steps last week aimed at preventing insider trading. Polymarket updated its rules to make clear that users cannot make trades based on confidential information. Kalshi announced a ban on political candidates trading on their own campaigns, and said it would block anyone from college or professional sports from making trades in sports they’re involved in.
The moves came as Democratic Sen. Adam Schiff of California and Republican Sen. John Curtis of Utah introduced legislation that would ban prediction markets from creating sports-related contracts, and give states regulatory control rather than the federal government. Mr. Schiff dismissed the companies’ statements as “aspirational.”
Mark Schiefelbein/AP/File
Two days later, in the House, Democratic Rep. Nikki Budzinski of Illinois and GOP Rep. Adrian Smith of Nebraska unveiled a bill that would prohibit members of Congress and the executive branch from prediction-market trades on politics or policy.
States are also getting into the act, with more than a dozen moving to regulate prediction markets. Last Friday, Democratic Gov. Gavin Newsom of California banned state appointees with insider information from participating in such markets. The same day, Washington State sued Kalshi for facilitating “illegal gambling.”
In just a few years, prediction markets have become a global phenomenon with international impact. In mid-March, an Israeli journalist told The Washington Post that online gamblers had pressured him to change his blog post about an Iranian missile strike so they could win a payout on Polymarket. The reporter said he faced threats to his own and his family’s safety if he didn’t comply – and, from one trader, a share of the winnings if he did. He didn’t change his report.
Last month, an Israeli Air Force reservist was indicted on multiple offenses related to alleged betting on Polymarket on the timing of Israel’s opening strikes against Iranian nuclear facilities last year.
Concerns about insider trading came to the fore last year when Mr. Trump’s tariff war was causing wild swings in the stock market. ProPublica reported that U.S. executive branch employees and congressional aides had sold stocks right before Mr. Trump’s initial big tariff announcement, which sent markets plummeting. Days later, when Mr. Trump announced a “pause” on those tariffs, causing markets to soar, some investors made big profits. Even if there was no insider trading, the appearance of possible impropriety threatened to harm public confidence, ethics experts said.
Today, the big issue is prediction markets and whether or how to regulate them. In a recent news conference introducing his legislation, Senator Murphy stepped back and posed a larger question.
“What happens to us spiritually when every moral question in this country just becomes a market? Don’t we lose something?” the senator asked.
“It’s really important that there are certain matters that are not monetized by prediction markets, whether that be humanitarian disaster overseas or the fundamental question of whether we go to war or not.”
