ABSTRACT
In recent months, trading in prediction markets offering event contracts has skyrocketed. Users can wager on the ratings of movies, sports, words used in speeches, and even the weather. While faced with some early legal challenges, these platforms now appear to have the blessing of the Commodity Futures Trading Commission (CFTC). But as these markets grow, so do the risks of insider trading. Even in the early months of these markets, there have been suspected cases of insider trading in markets ranging from Taylor Swift’s engagement to the winner of the Nobel Peace Prize.
This Article provides a comparison of insider trading regulation across securities, commodities, and gambling regimes to assess the measures available to prediction markets. It shows that current enforcement and monitoring regime is limited in scope and resources, leaving prediction markets vulnerable to insider activity. Drawing in part on the measures used in similar markets, the Article offers a few possible solutions: establishing lower position or accountability limits for select markets, creating a self-regulatory organization (SRO) for prediction markets, and instituting employer-based trading policies. These reforms balance the interest in the information generated by the markets with their institutional risks and need for investor protection.
Ashar, Raj, Insider Trading in the Era of Event Contracts (October 16, 2025).
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