Federal prosecutors in New York have met with representatives from Polymarket to discuss how existing laws on insider trading might be applied to suspicious bets, according to a new report from CNN.
The report from CNN is quick to note that no one at Polymarket has been accused of wrongdoing, but it’s not surprising that prosecutors from the U.S. attorney’s office for the Southern District of New York would want to chat.
There have been a number of highly suspicious trades on Polymarket in recent months, including some people who have bet on the timing of the start to the Iran War and the kidnapping of Venezuela’s president Nicolas Maduro. One trader who bet $30,000 on Maduro’s capture reportedly walked away with over $430,000.
Polymarket was effectively banned in the U.S. in 2022 for operating an unlicensed trading platform, but it bought a holding company that offers licensed trading in 2025. The company received regulatory approval in November 2025 and is slowly relaunching in the U.S. this year, though it’s not widely available to most Americans yet.
Polymarket didn’t immediately respond to a request for comment but told CNN: “Polymarket sets, maintains, and enforces the highest standards of market integrity. We also proactively work with regulators and law enforcement to reinforce those standards.”
Prediction markets (the companies don’t like the terms gambling and betting) have exploded in popularity as betting seems to touch every aspect of modern American life. But there’s been push-back by legislators and some members of the public who are concerned about the proliferation of gambling and insider trading.
Some opponents of prediction markets are simply unhappy to have a new kid on their turf. Kalshi, the other U.S. prediction market platform that’s legally operating in the U.S., was recently banned in Nevada for two weeks after it was sued by the powerful gaming industry there. The judicial order blocks contracts for anything involving sports, elections, and entertainment, at least for the time being.
States have also gone after the prediction markets, with Arizona’s Attorney General filing criminal charges against Kalshi this month which the company has called “meritless.”
“Kalshi may brand itself as a ‘prediction market,’ but what it’s actually doing is running an illegal gambling operation and taking bets on Arizona elections, both of which violate Arizona law,” Kris Mayes, the attorney general of Arizona, said in a statement published online.
The companies know they’re under intense scrutiny not just from regulators but from the average person placing bets who may feel like things are unfair. Polymarket introduced new rules last week that ban bets from people who use stolen information or from those who have the ability to influence the outcome of an event. And Kalshi said it was introducing a new ban aimed at preventing politicians from betting on their elections and athletes from betting on sports they play.
Love them or hate them, everyone seems to be monitoring prediction markets as a form of snap poll or as a way to see just over the horizon since odds can change quickly. Will traffic through the Strait of Hormuz return to normal by the end of April? Traders on Polymarket say there’s a 24% chance, down from 43% as recently as March 24.
But it’s hard to say whether these prediction markets actually provide useful insight into things that may or may not happen. That spike on March 24 was related to the news that President Donald Trump had offered a 15-point peace plan and ceasefire to Iran to end the war. We’ve since learned that Iran says there are no talks between the two countries and that Trump seems to simply be engaging in market manipulation.
And if people close to Trump know the real score, they can make quite a bit of money placing bets shortly before something significant happens. Even if they want to, it’s a hard thing to police. Kalshi CEO Tarek Mansour was asked on CNBC about bets on what would be the first song Bad Bunny performed at the Super Bowl. How do you protect against “insider trading” when the answer might be known by a large number of people, from members of the TV crew to background dancers? Unsurprisingly, Mansour didn’t have a real answer. Perhaps because there isn’t one.
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