Amara Maple
Earlier this month, a wave of news reports brought to light serious allegations of insider trading involving a teleprompter operator for former President Trump, who reportedly placed profitable bets on prediction markets regarding the content of Trump’s forthcoming speeches on platforms like Kalshi. This revelation has intensified calls from advocacy groups, most notably Public Citizen, for the Commodity Futures Trading Commission (CFTC) to robustly investigate and enforce laws against such illicit activities, characterizing the burgeoning prediction market industry as operating akin to the "Wild West."
The recent incident involving the teleprompter operator is not an isolated event but rather the latest in a series of highly suspicious trading patterns that have raised red flags for ethics watchdogs. Craig Holman, a prominent government affairs lobbyist at Public Citizen, has been at the forefront of this advocacy, repeatedly appealing to the CFTC to address what he describes as widespread insider trading on these nascent markets.
The Rise of Prediction Markets and Suspicious Trading Patterns
Prediction markets, once niche platforms primarily used for hedging business risks or forecasting economic trends, have dramatically expanded their scope to encompass a wide array of political events, elections, and even specific policy outcomes. Companies like Kalshi and Polymarket now actively advertise the ability to bet on virtually any conceivable event. While proponents argue these markets offer unique insights into collective intelligence and future probabilities, critics like Public Citizen warn they have become fertile ground for individuals with privileged information to exploit for personal gain.
The gravity of the situation became acutely apparent following the American invasions of Venezuela and Iran, events that, according to Holman, served as a stark introduction for many Americans to the dark underbelly of prediction markets. Public Citizen had previously filed an insider trading complaint with the CFTC on March 5, 2026, following highly suspicious trades related to the timing and developments surrounding the American invasion of Iran. This complaint detailed instances where significant bets were placed just hours before major geopolitical events unfolded, leading to substantial profits for a small, anonymous group of bettors.
Holman elaborated on these incidents in an interview, describing how, in the context of Venezuela, "half a dozen very large bets were placed that we were going to invade Venezuela the next day and capture Maduro" just hours before the event materialized. These timely and accurate bets reportedly yielded $1.2 million in profits solely on the timing of the invasion. Similar patterns emerged concerning the invasion of Iran, with one individual winning $553,000 on a bet that the Iranian leader would be out of power by a specific time, placing the wager only an hour before the leader’s reported demise. These examples, Holman contends, strongly suggest insider trading, likely by individuals within the Trump administration who possessed foreknowledge of these critical developments.
The Teleprompter Scandal: A New Dimension of Concern
The recent revelation regarding former President Trump’s teleprompter operator adds a new, concrete layer to these allegations. Multiple news outlets reported that the operator was placing profitable bets on Kalshi concerning the precise content of Trump’s upcoming speeches. Such a position would grant direct, real-time access to information capable of influencing market outcomes, whether in traditional financial markets or prediction markets. The operator reportedly won tens of thousands of dollars through these bets and has since been relieved of his duties.
This incident, as Holman points out, serves as "further evidence of illegal insider trading on the prediction markets – an industry that the Commodity Futures Trading Commission has let operate like the Wild West." It highlights a critical vulnerability: individuals with seemingly innocuous access to privileged information, even those in supporting roles, could leverage that access for illicit financial gain, potentially undermining public trust and the integrity of these emerging financial platforms.
The CFTC’s Role and Perceived Inaction
Public Citizen, alongside other advocacy groups like Better Markets, has been vocal in its criticism of the CFTC’s perceived failure to adequately regulate prediction markets and enforce insider trading laws. On April 30, 2026, both organizations collectively urged the CFTC to conduct comprehensive rulemaking on prediction market trading activity, advocating for a clear regulatory framework to prevent exploitation.
Holman directly challenged the CFTC’s inaction, questioning why the commission has failed to investigate the identities of those behind the suspicious trades related to the invasions. He pointed to the problematic leadership at the CFTC, noting that Michael Selig, appointed by Trump, was formerly an attorney for the prediction market industry. This background, Holman suggests, has contributed to a deliberate deregulation of these markets, leaving them largely unsupervised. "The CFTC has done absolutely nothing," Holman stated emphatically, reiterating Public Citizen’s demand for the commission to "wake up and do its job of overseeing the prediction market industry and enforcing the insider trading laws."
While the government’s response has been criticized, some prediction market companies have taken initial steps towards self-regulation. Kalshi, for instance, was credited with releasing information about the teleprompter operator’s trading activities. Holman acknowledged Kalshi’s efforts but stressed that self-regulation is insufficient. He argued that the industry’s move towards internal oversight is driven by a recognition of legislative calls to ban certain types of betting activity due to the markets being "out of control." True regulation, he asserted, must come from 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."
Broader Implications: Congressional Insider Trading and the STOCK Act
The debate over insider trading on prediction markets parallels a long-standing ethical challenge in American politics: insider trading by members of Congress. The perceived impunity of lawmakers in financial markets has been a persistent concern, leading to the passage of the Stop Trading on Congressional Knowledge (STOCK) Act in 2012.
Before the STOCK Act, members of Congress were effectively exempt from the same insider trading laws that applied to ordinary citizens. This loophole allowed them to profit from non-public information gained through their legislative duties. A study conducted at the University of Georgia, cited by Holman, revealed that Senators historically enjoyed a twelve percent higher rate of return on the stock market compared to the general public, strongly suggesting the exploitation of inside information.
The STOCK Act aimed to rectify this by explicitly applying insider trading laws to members of Congress and requiring online disclosure of their stock trading activities. The intent was twofold: to legally prohibit insider trading and to deter such activities through increased transparency and the associated political risks. Holman’s own study on the impact of the STOCK Act, measuring Congressional trading three years before and three years after its implementation, found a "dramatic impact," reducing Congressional stock trading activity by approximately two-thirds.
However, the STOCK Act has proven to be an incomplete solution. Holman’s study also revealed that "one-third of Congress out there playing the stock market with direct conflicts of interest." The limitations of the Act became glaringly apparent during the COVID-19 pandemic. Several Senators, after attending confidential briefings with the Centers for Disease Control and Prevention (CDC) where they learned about the pandemic’s impending devastating economic and market impact, reportedly dumped significant portions of their stock holdings immediately afterward. Despite calls for investigations into these alleged insider trading incidents, no prosecutions or significant actions were taken. This highlights the inherent difficulty in proving insider trading, even with increased transparency.
The Ongoing Legislative Battle for Stricter Ethics
The persistent problem has fueled a renewed push for more stringent legislation, with Holman advocating for an outright ban on stock trading by members of Congress. This effort has, however, become entangled in partisan politics.
A bipartisan consensus bill, "The Restore Trust in Congress Act" (HR 5106), emerged with support from both Democrats and Republicans, led by figures like Chip Roy. This bill sought to ban stock trading for members of Congress. However, its progress was reportedly stalled when House Democratic leader Hakeem Jeffries allegedly opposed it, fearing Republicans might receive undue credit. Jeffries subsequently proposed his own bill, which expanded the trading ban to include the President, a provision Republicans are unlikely to support, effectively creating a political stalemate.
The scale of Congressional trading activity remains substantial. Reports indicate that members of Congress made over $630 million in stock trades last year. Data further reveals a bipartisan involvement in these trades, with six out of the top ten traders in Congress being Democrats, including prominent figures like Senator Richard Blumenthal, Congressman Ro Khanna, Congressman Josh Gottheimer, and former Speaker Nancy Pelosi (whose husband famously engaged in significant trading). Holman acknowledged this as a "bipartisan problem," noting that while Pelosi initially resisted a ban due to her husband’s financial activities, she later endorsed the bill.
Despite the bipartisan nature of the problem, political maneuvering continues to hinder meaningful reform. Holman expressed frustration with House Speaker Mike Johnson, whom he tried to persuade to bring the consensus bill (HR 5106) to a floor vote, arguing it would pass with broad support and earn Johnson political credit. Instead, Johnson introduced what Holman described as "inadequate legislation" – HR 7008, titled "Stop Insider Trading," which Holman dismissed as a "ruse" designed to appear active without enacting substantive change.
The debate underscores a fundamental tension between the financial freedoms of public servants and the imperative to maintain public trust and prevent conflicts of interest. While the STOCK Act was a necessary step, the continued incidence of suspicious trading, both in traditional markets and the emerging prediction markets, suggests that current regulations are insufficient. As Craig Holman and Public Citizen continue their advocacy, the calls for a complete prohibition on stock trading by members of Congress, and for robust, independent oversight of prediction markets, are set to intensify, challenging lawmakers to prioritize public ethics over personal financial opportunities.
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