The Republican-controlled House Oversight Committee is calling for new laws to crack down on insider trading in prediction markets.
The increasingly popular markets let users trade on yes-or-no outcomes in sports, politics, weather and other areas.
A new memorandum from committee staff advocates legislation to “eliminate even the appearance that government personnel are exploiting non-public information received in an official capacity for financial gain.”
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The panel noted examples of alleged insider trading that informed its report.
They include allegations that former New York Rep. George Santos manipulated markets speculating on whether he would attend the State of the Union, a teleprompter operator profited from knowledge of President Trump’s speeches and a U.S. Army sergeant profited from classified information on the capture of Venezuelan President Nicolas Maduro.
“Government personnel should be restricted, at a minimum, from trading on contracts related to government actions or political outcomes,” the committee suggested.
The committee spoke with five prediction market companies, four of which provided information on how they combat insider trading.
Prediction markets are regulated by the Commodity Futures Trading Commission, a federal financial watchdog, and are subject to the same insider trading laws as securities and derivatives, the committee noted.
The Pentagon has issued its own memorandum prohibiting service members from trying to profit from their access to nonpublic information by trading in the markets.
Similarly, the Senate has passed a ban on its members and staff using prediction markets.
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