Securities Regulation Daily Wrap Up, COMMODITY FUTURES—Democrat-led letter urges DOJ to prosecute prediction markets frauds, (May 13, 2026)

By Mark S. Nelson, J.D.

The lawmakers noted what they believe to be an inconsistent approach by DOJ to possible fraudulent activity in prediction markets.

A Democrat-led letter to Acting U.S. Attorney General Todd Blanche urged Blanche to solidify department policy towards criminal and civil cases involving prediction markets into a coherent policy going forward. The lawmakers’ letter noted some enforcement activities by the DOJ but suggested the department could do more to police the emerging prediction markets.

“Recent suspected violations implicate significant geopolitical, sporting, and cultural events and risk creating perverse incentives for persons with access to confidential or classified information,” said the lawmakers.

The lawmakers cited multiple examples of potential prediction market fraud, including attempts to profit from bets on: (1) U.S. military action in Iran, (2) who might perform at the Super Bowl halftime show, and (3) which persons may be nominated for or win the Nobel Prize.

According to the lawmakers, the DOJ’s efforts to prosecute an individual who placed a bet in a prediction market regarding U.S. efforts to remove the former leader of Venezuela don’t go far enough given the rapid expansion of prediction markets. The lawmakers want the DOJ to prioritize these cases.

“Trading on confidential, non-public information is illegal in traditional financial markets when it involves fraud, deception, or breach of duty,” said the lawmakers. “Failure to enforce these laws in the context of prediction markets risks creating a regulatory gap that rewards bad actors, incentivizes misconduct, and undermines confidence in the integrity of U.S. markets.”

The lawmaker also noted that the current Administration has emphasized growth of U.S. stock markets. But the lawmakers cautioned that U.S. financial markets are predicated on “integrity and accountability” and that the department should ensure that prediction market platforms have adequate safeguards to detect and prevent unlawful activities on those platforms.

LegislativeActivity: BrokerDealers CommodityFutures Derivatives Enforcement FinancialIntermediaries FraudManipulation InvestorEducation RiskManagement Swaps