Craig Holman on Insider Trading in Congress and the Prediction Markets

The integrity of burgeoning prediction markets has been thrust into the national spotlight following reports earlier this month that a teleprompter operator for former President Donald Trump was placing profitable bets on Kalshi, a regulated prediction market platform, concerning the content of Trump’s upcoming speeches. This revelation has intensified long-standing calls from consumer advocacy groups like Public Citizen for the Commodity Futures Trading Commission (CFTC) to aggressively investigate and enforce laws against insider trading in these increasingly popular but largely unregulated financial arenas.

The incident, which led to the immediate dismissal of the unnamed operator, underscores a growing concern among ethics watchdogs and market analysts: the potential for individuals with privileged information to exploit political and economic events for personal financial gain. This particular case highlights the alarming proximity of those with insider knowledge to the mechanisms of public communication, raising profound questions about the ethics of prediction markets and the adequacy of current regulatory frameworks.

The Teleprompter Scandal Unveiled: A Breach of Trust

The news that a White House teleprompter operator was leveraging advance knowledge of presidential remarks for financial profit sent shockwaves through Washington and the financial community. According to reports, the operator utilized the Kalshi platform, known for its event contracts, to wager on specific phrases, policy announcements, or thematic elements that would appear in Trump’s speeches. The precise timing and consistent profitability of these bets raised immediate red flags, pointing directly to a clear instance of insider trading—the illegal practice of using non-public information to make a profit.

The incident came to light through the diligence of Kalshi itself, which, in a move widely commended by market observers, reportedly identified and flagged the suspicious trading activity before turning over evidence to relevant authorities. This act of self-regulation by Kalshi, while positive, has been framed by critics as a defensive measure by an industry under siege, facing legislative scrutiny that threatens its very operating model. Craig Holman, the government affairs lobbyist at Public Citizen, remarked, "It is to Kalshi’s credit that they identified and reported this. However, markets of this nature should not rely on self-regulation. They require robust, neutral oversight from a governmental entity like the CFTC to ensure fairness and prevent manipulation." The operator, who allegedly won "tens of thousands of dollars" from these illicit trades, was promptly relieved of their duties following the exposure.

Prediction Markets: A New Frontier for Speculation and Ethical Dilemmas

Prediction markets like Kalshi and Polymarket have rapidly expanded beyond their initial scope of allowing bets on traditional business outcomes. They now offer a vast array of event contracts covering political developments, election results, economic indicators, and even geopolitical events. While proponents argue they offer a unique form of collective intelligence and a valuable tool for forecasting, critics warn that their rapid growth and broad reach, particularly into politically sensitive areas, create fertile ground for abuse.

"Most Americans had never heard of prediction markets until the American invasions of Venezuela and Iran," Holman told Corporate Crime Reporter in an interview. This statement encapsulates the recent shift in the public’s awareness and the markets’ perceived ethical boundaries. These platforms, operating under a regulatory umbrella that many consider insufficient, have been likened to the "Wild West," where the speed of innovation has outpaced the pace of oversight. This regulatory vacuum allows individuals with privileged information to engage in activities that would be strictly illegal in traditional securities markets.

A Pattern of Suspicious Trading: From Geopolitics to Presidential Speeches

The teleprompter operator scandal is not an isolated incident but rather the latest in a series of suspicious trading activities on prediction markets that have drawn the ire of Public Citizen and other advocacy groups. For months, Holman has been vocal about unusual betting patterns coinciding with major geopolitical developments.

A key event cited by Public Citizen occurred on March 5, 2026, when the organization filed an insider trading complaint with the CFTC. This complaint followed "highly suspicious trades" on the timing and developments of the American invasion of Iran, as well as prior trades related to the invasion of Venezuela. Holman detailed the alarming precision of these bets: "Just hours before the American invasion of Venezuela, half a dozen very large bets were placed that we were going to invade Venezuela the next day and capture Maduro. And sure enough, those bets paid off." These six suspected insider trading bets reportedly yielded a staggering $1.2 million in profits based solely on the timing of the invasion.

Similar patterns emerged around the conflict in Iran. "Then other bets were placed on the invasion of Iran. And those paid off several millions of dollars," Holman stated, adding, "One person won $553,000 on a bet that the leader of Iran would be out of power by a certain time. He placed the bet an hour before the Iranian leader was killed." Such precise timing, often within hours or even minutes of major, market-moving events, strongly suggests access to highly confidential, non-public information, likely originating from within the Trump administration.

The Regulatory Vacuum: CFTC Under Scrutiny for Inaction

Public Citizen, alongside Better Markets, has repeatedly implored the CFTC to fulfill its mandate and regulate these markets effectively. On April 30, 2026, both organizations formally urged the CFTC to initiate rulemaking specifically addressing prediction market trading activity. Despite these persistent appeals and clear evidence of potential insider trading, the CFTC has faced heavy criticism for its perceived inaction.

A significant point of contention revolves around the leadership of the CFTC. Holman highlighted that the commission is currently run by Michael Selig, "who was an attorney for the prediction market industry." Selig’s appointment by the Trump administration, allegedly to "further deregulate the prediction markets," has fueled concerns about a conflict of interest and a deliberate weakening of oversight. "The CFTC has done absolutely nothing," Holman lamented, expressing deep frustration over the agency’s failure to investigate the suspicious trades related to the Venezuela and Iran invasions, let alone proactively establish a robust regulatory framework. Critics argue that this lack of enforcement not only allows illicit activities to flourish but also erodes public trust in the integrity of these markets and the government’s commitment to fair play.

Self-Regulation vs. Comprehensive Government Oversight

While Kalshi’s decision to report the teleprompter operator is a positive step, it underscores a broader debate about the appropriate level of regulation for prediction markets. Industry players argue that self-policing mechanisms, coupled with their platforms’ transparency (where all bets are publicly recorded), can mitigate risks. However, advocacy groups maintain that relying solely on companies to police themselves is insufficient and fraught with potential conflicts of interest.

"Kalshi is trying to do some self-regulating," Holman acknowledged, "But that isn’t how these markets should be regulated. They should be regulated by a balanced and neutral governmental entity – the CFTC – and not by the businesses themselves that may or may not be honest with us about what’s going on." The argument is clear: genuine market integrity and public confidence require independent, authoritative oversight, not just voluntary compliance. Without clear rules and aggressive enforcement, the risk of manipulation and exploitation remains unacceptably high, threatening to undermine the very concept of fair markets.

Historical Parallels: Congressional Insider Trading and the STOCK Act

The current debate over prediction market insider trading draws striking parallels to historical issues surrounding congressional insider trading, a problem that plagued Capitol Hill for decades. Prior to 2012, members of Congress were largely exempt from the same insider trading laws that applied to the general public, leading to widespread ethical concerns.

A seminal study conducted at the University of Georgia revealed that U.S. Senators enjoyed a "twelve percent higher rate of return on the stock market than the rest of us." This statistically significant disparity strongly suggested that lawmakers were leveraging non-public information gained through their legislative duties for personal financial gain.

In response to public outcry and sustained advocacy, Congress passed the Stop Trading on Congressional Knowledge (STOCK) Act in 2012. This landmark legislation aimed to address the ethical loophole by:

1. Applying Insider Trading Laws: Explicitly making it illegal for members of Congress and their staff to profit from non-public information obtained through their official positions.
2. Requiring Online Disclosure: Mandating the timely, public disclosure of all stock trades made by members of Congress and their spouses, allowing for public scrutiny and accountability.

Holman, who was instrumental in advocating for the STOCK Act, initially hoped that the disclosure requirements alone would deter many from trading due to the "political risks." His subsequent research, however, revealed a mixed bag. "I conducted a study on the impact of the Stock Act. I measured Congressional trading activity three years prior to the Stock Act and three years after the Stock Act. I found that it did have a dramatic impact. It lessened Congressional stock trading activity by about two-thirds," he noted.

Despite this reduction, the troubling reality remains that "one-third of Congress out there [is] playing the stock market with direct conflicts of interest." The limitations of the STOCK Act became glaringly apparent during the early days of the COVID-19 pandemic. Several Senators, after attending confidential briefings with the Centers for Disease Control and Prevention (CDC) about the impending economic devastation of the virus, immediately dumped significant portions of their stock holdings. While these actions sparked outrage and calls for investigation, proving insider trading under existing laws proved exceptionally difficult, and "nothing was ever done."

The Unfinished Battle: Pushing for an Outright Ban

The persistent issues, from pandemic-era trading to the current prediction market scandals, have galvanized a renewed push for even stricter measures: an outright ban on stock trading by members of Congress. Holman firmly believes that simply applying insider trading laws and requiring disclosures is insufficient. "The Stock Act was necessary but we need to go a step further now. There is still a good portion of members of Congress who just don’t seem to care about their public reputations. So we have to just ban stock trading activity for Congress altogether," he asserted.

This legislative effort has encountered significant political hurdles, highlighting the bipartisan nature of the problem. While figures like former Speaker Nancy Pelosi initially resisted such bans (her husband famously engaged in active and profitable trading), she later came to endorse the concept. The current legislative landscape is mired in partisan maneuvering. A bipartisan consensus bill, "The Restore Trust in Congress Act" (HR 5106), led by Republican Chip Roy, gained considerable traction. However, it was reportedly sidelined when House Democratic Leader Hakeem Jeffries introduced his own bill, which controversially extended the trading ban to include the President. While conceptually sound from a policy perspective, this move was widely perceived as a political tactic designed to make Republicans appear uncooperative, as they would likely oppose a bill targeting a former or future Republican president.

Speaker Mike Johnson, in turn, introduced what critics, including Holman, have dismissed as "inadequate legislation" – HR 7008, misleadingly titled "Stop Insider Trading." Holman called it "a ruse," arguing that it does little to genuinely address the issue. The political gridlock ensures that despite broad public support for curbing congressional stock trading, meaningful reform remains elusive. The financial stakes for lawmakers are substantial; congressional members reportedly made over $630 million in stock trades last year, with a significant number of top traders belonging to both parties. This financial incentive continues to be a formidable barrier to comprehensive reform.

Implications for Market Integrity and Public Trust

The unfolding scandals surrounding prediction markets and the persistent challenges of insider trading in Congress carry profound implications for market integrity, public trust, and the very foundation of democratic governance. When individuals in positions of power or with privileged access can covertly profit from sensitive information, it erodes the principle of fairness that underpins both financial markets and public service.

The lack of robust regulatory oversight in prediction markets creates an environment ripe for manipulation, distorting outcomes and potentially influencing public discourse for personal gain. Similarly, allowing elected officials to trade on information garnered from their public duties undermines the public’s faith in their representatives, fostering cynicism and disengagement.

The calls for stronger action from the CFTC and for a comprehensive ban on stock trading by members of Congress are not merely academic debates. They represent a fundamental demand for accountability, transparency, and ethical conduct from those who shape public policy and influence national and global events. Without decisive action to address these issues, the "Wild West" mentality may continue to prevail, with potentially far-reaching consequences for both economic stability and democratic legitimacy. The teleprompter operator’s illicit bets serve as a stark reminder of the urgent need for robust ethical safeguards in an increasingly complex and interconnected world.