In his first public remarks as enforcement director, David Miller pushed back against what he described as a widespread misunderstanding about how such markets are regulated.
“Unfortunately, there’s a myth in mainstream media and social media that insider trading doesn’t apply in the prediction markets,” Miller said. “That is wrong.”
The comments come amid growing scrutiny of trading activity around major geopolitical events and as prediction markets attract increasing interest from investors and firms.
The regulator’s position is that event-based contracts fall within the definition of swaps, placing them firmly under federal oversight rather than state-level gambling rules.
“Our position is that event contracts are not gaming. The event contracts at issue are swaps. Insider trading law applies,” he said.
The classification is central to an ongoing debate with some U.S. state regulators, who have argued that prediction markets should be treated as gambling products under their jurisdiction.
Miller also outlined how the agency will enforce insider trading rules in the sector, drawing a distinction between legitimate use of information and illegal conduct.
“We will only be prosecuting cases against those who tip or trade with misappropriated information,” he said, adding that the agency would not pursue minor or “trivial” cases.
The stance signals that participants in prediction markets, including brokers and fintech firms, will be expected to comply with the same standards applied in other derivatives markets, particularly around the use of non-public information.
Miller also indicated a broader shift in enforcement strategy, with the regulator planning to encourage greater cooperation from companies and individuals, including the possibility of reduced penalties in certain cases.
Dingnews.com 03/04/2026