More than 40 Democrats in the U.S. Senate and House of Representatives sent a letter to a federal regulator and to ethics officials to ask them to warn government officials that insider trading in derivatives is illegal and that bets they make on prediction markets firms like Polymarket and Kalshi qualify under that category.

The ranking Democrats on the Senate Banking Committee (Senator Elizabeth Warren) and Senate Agriculture Committee (Cory Booker) joined dozens of their colleagues in asking Chairman Mike Selig, chief of the Commodity Futures Trading Commission, and the leaders of the U.S. Office of Government Ethics to “circulate executive branch-wide guidance explaining that federal employees must refrain from insider trading in prediction markets.”

The request was spurred by the eruption of suspicious reports that recent event contracts on government or military action seemed to draw bets from people with special insight into the outcomes, leading many to believe that government officials — or people associated with them — may have made such bets. U.S. derivatives laws state the illegality of government officials making trades based on non-public information they got on the job. Since the CFTC has declared the contracts at such firms are regulated derivatives, the ban should hold true, the lawmakers contended.