Prediction markets have recently emerged as a major focus of both federal and State regulators. With reported daily trading volumes exceeding $100 million ‑ and substantially more during major events such as the Super Bowl and federal elections ‑ these markets have drawn increasing scrutiny over concerns involving insider trading, market manipulation, and consumer protection.
Insider Trading
Do Your Insider Trading Policies Cover The Prediction Markets? Should They?
Prediction markets now offer contracts tied directly to public company events—including stock price movements, earnings call language, regulatory outcomes, corporate announcements, and management decisions. These contracts are typically structured as event-based instruments rather than traditional securities. But for public companies, the practical question is straightforward: If employees are prohibited from trading securities on inside information, can they still bet on it?