The latest push for federal scrutiny of prediction markets followed an Associated Press report that users placed bets on a U.S.-Iran ceasefire shortly before President Donald Trump announced the ceasefire late Tuesday on social media. The report said newly created, anonymous accounts made highly specific wagers on the outcome, in the hours and even minutes before Trump’s announcement—prompting lawmakers to demand investigations and answers from the platforms.
Rep. Ritchie Torres, a Democrat from New York who sits on the House Financial Services Committee and its digital assets subcommittee, sent a letter to the Commodity Futures Trading Commission calling for review and investigation into the trades described by the AP. Torres said the pattern raises “serious concerns that certain market participants may have had access to material nonpublic information regarding a market-moving geopolitical event,” according to the letter that AP described as shared exclusively with the outlet.
Torres also spoke directly to AP about the odds of such timing, saying, “What is the statistical likelihood that of anyone other than an insider trader placing a winning bet 12 minutes before a market-moving presidential announcement,” AP reported. In the same interview, he said, “There are two answers: God, or an insider trader,” and argued that “something tells me that God it not placing bets around Donald Trump’s posts on Truth Social.”
Lawmakers said the ceasefire wagers were not an isolated example. AP reported that in January, an anonymous Polymarket user made a $400,000 profit after betting that Venezuelan leader Nicolas Maduro would be out of office, hours before Maduro was captured. The report also cited earlier Polymarket trades around the start of the Iran war, when another account made roughly $550,000 through a series of bets tied to expectations that the U.S. would strike Iran and that Ali Khamenei would be removed from office.
Sen. Richard Blumenthal, the Connecticut Democrat, sent a separate letter to Polymarket asking the company to explain why it continues to allow trading on “war and violence.” Blumenthal also demanded to know whether the platform is making efforts to keep insiders from trading on those contracts. In the letter, AP reported, he described Polymarket as “an illicit market to sell and exploit national security secrets unlike any in history,” and said that it could function as a “potential honeypot” for foreign intelligence services watching suspicious bets.
Republicans have joined the criticism as well, with some lawmakers calling for bans on prediction-market wagers tied to major geopolitical events. Rep. Blake Moore, a Utah Republican, told AP after the ceasefire-wager findings were released that lawmakers “don’t want to imagine a world where America’s adversaries use prediction markets to anticipate our next move.”
AP reported that Polymarket has not replied immediately to requests for comment. The company’s position in the U.S. also remains a key part of the scrutiny: Polymarket was banned from operating in the United States in 2022, but it has moved to reenter by acquiring a CFTC-licensed exchange and clearinghouse to create a legal pathway for domestic contracts, with a limited rollout already underway. The firm also operates a separate offshore, crypto-based platform that remains outside U.S. jurisdiction, and AP reported that most of its activity occurs there.
The calls for investigations come as Polymarket and a competitor, Kalshi, work to expand their approvals and consumer reach. AP reported that Kalshi is already regulated in the U.S. and that both firms have leaned on partnerships with sports teams and other organizations, including an Associated Press agreement described by AP to sell U.S. elections data to Kalshi. AP also reported that the competition carries political overtones, including that Donald Trump Jr. is an investor in Polymarket through his venture capital firm, 1789 Capital, and separately serves as a paid strategic adviser to Kalshi.
If you want, I can adapt this into a shorter “bridge” version focused only on the lawmakers’ letters and what the CFTC and Polymarket would be asked to do next.