WASHINGTON—As recent geopolitical events shake financial markets, some traders are making risky bets to profit from the volatility.
In an email on March 24, the White House warned staff not to trade or place bets related to the U.S. war in Iran, including on prediction markets.
The warning aimed to prevent any misuse of confidential information, the White House told The Epoch Times.
“President [Donald] Trump has been crystal clear: while he seeks a strong and profitable stock market for everyone, members of Congress and other government officials should be prohibited from using nonpublic information for financial benefit,” Davis Ingle, White House spokesman, said in an email.
The warning was in line with government ethics guidelines that prohibit the use of nonpublic information for trading activity, he said.
Ingles added that “any implication that administration officials are engaged in such activity without evidence is baseless and irresponsible reporting.”
The White House statement came after some media outlets reported unusually large trades in the oil markets ahead of official U.S. government announcements regarding the Iran war.
Federal rules prohibit government employees from gambling or placing bets on sports or other events while on duty or on government-owned or leased property, unless such activity is necessary to their official duties.
The Commodity Futures Trading Commission (CFTC), which regulates derivatives markets, including futures, swaps, and certain options, is equipped with the surveillance tools to monitor such trading activities by government employees, according to a U.S. official.
“The commission has staff in place, complex surveillance tools, and is consistently monitoring for illegal activity,” the official said.
Prediction markets such as Polymarket and Kalshi are online platforms where users buy and sell contracts based on the outcomes of real-world events, including government decisions, political events, economic accouchements, sports, and pop culture.
The price reflects the public’s estimated probability of the event happening.
These platforms have caught the attention of regulators recently.
California Gov. Gavin Newsom issued an executive order on March 30 prohibiting state officials from using insider knowledge to profit or helping others profit on prediction markets.
The governor’s office said that, in one example, insiders made $1.2 million betting on a U.S. strike against Iran.
In a separate incident, an individual made more than $400,000 betting on the U.S. military capturing former Venezuelan leader Nicolás Maduro just hours before the event.
U.S. lawmakers have also proposed bills to bar any public official from placing bets using confidential information.
