Law enforcement’s scrutiny of the trading involving the prediction markets should come as no shock, prime financial cops say – as they are no longer just apps used by sports activities followers to wager on video games, but high-profile venues used by refined merchants to gauge dangers across international occasions, On The Money has realized.
Prediction market quantity is hovering; month-to-month trading quantity is now $20 billion, up from just $1.2 billion in 2025. Much of that quantity is based mostly on wager on sports activities – what groups will advance in March Madness, or who will win the Super Bowl.
But an rising phase of the betting markets includes Wall Street, and the markets themselves operate in the same fashion as those that deal with futures contracts. Major market makers are concerned in the matching of trades much as they do with stock orders.
Prediction market quantity is hovering; month-to-month trading quantity is now $20 billion, up from just $1.2 billion in 2025. Much of that quantity is based mostly on wager on sports activities. Jack Forbes / NY Post Design
Plus, main banks are now embracing them as an indicator of where so-called “smart money” is gauging the end result of main financial occasions such as rate of interest selections by the Federal Reserve, or the end result of hostile takeovers such as Paramount Skydance’s profitable bid to wrest Warner Bros. Discovery from streaming giant Netflix.
Research reports are now more and more referencing the prediction markets as they might the price of gold or oil.
With such growth also comes the potential for fraud. As The Post has reported federal prosecutors in Manhattan are scrutinizing well-timed bets on prediction markets that have these days grabbed headlines — and are analyzing whether they may have violated insider-trading legal guidelines.
Officials at the US Attorney for the Southern District of New York — headed by former Securities and Exchange Commission Chairman Jay Clayton — just lately met with reps from Polymarket about profitable wagers on shock occasions like the seize of Nicolas Maduro and missile strikes on Iran, sources close to the scenario said.
Officials at the US Attorney for the Southern District of New York — headed by Jay Clayton — just lately met with reps from Polymarket about profitable wagers on shock occasions like the seize of Nicolas Maduro. Brian Zak/NY Post
“The action in the prediction markets, like the action in any markets, is stuff that will be looked at,” a source with data of the matter instructed The Post.
Veteran hedge fund trader Scott Matagrano has witnessed this growth and says Clayton had no selection but to start kicking the tires in the prediction markets.
While no corporations have been accused of wrongdoing, the “SDNY presumably had to engage here because you can’t have a multi-billion-dollar market operating with little oversight structure,” he added.
A spokesman for Polymarket tells On The Money: “Polymarket sets, maintains and enforces the highest standards of market integrity. We also proactively work with regulators and law enforcement to enforce those standards.”
A spokesperson for Kalshi, headed by CEO Tarek Mansour, referred The Post to social-media feedback by the company’s Head of Enforcement Robert DeNault, saying insider trading and market manipulation are violations of Kalshi’s guidelines.
“Kalshi has been and will continue to collaborate with law enforcement on investigations to ensure the integrity of regulated prediction markets,” he wrote on X.
