David Miller, the newly appointed director of the CFTC’s Division of Enforcement, recently outlined the agency’s enforcement priorities, including in the $400 trillion swaps markets, which encompasses prediction markets. Although he emphasized a shift from “regulation by enforcement,” Miller promised that the CFTC “enforcement program will relentlessly focus on serious violations, especially fraud and market manipulation.”
Miller focused most of his remarks on insider trading in prediction markets and expressed concern that “a myth has spread that insider trading is permissible—even encouraged—in prediction markets.” In the CFTC’s view, event contracts are swaps under the CEA, bringing prediction markets within its anti-fraud provisions and the CFTC’s enforcement authority. He emphasized that the CFTC can and will pursue such conduct under CEA Section 6(c)(1) and Rule 180.1, which were added to the CEA as part of the Dodd-Frank reforms following the 2008 financial crisis and modeled on Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. These reforms incorporated misappropriation insider trading liability into the commodity, futures, and swap markets. Accordingly, liability arises when trading or tipping MNPI breaches a duty of trust and confidence, with scienter. Miller stressed that his remarks were limited to misappropriation theory insider trading only and that prediction market participants are entitled to trade on MNPI that they rightfully own.
Miller opined that potential insider trading is occurring in prediction markets and provided examples of trades that may be scrutinized, such as transacting based on MNPI in contracts based on the status of people or a small group of people, sports injury contracts, and government employees illegally using information to trade or tip in violation of the STOCK Act and Section 4c(a)(4) of the CEA (the so-called “Eddie Murphy Rule”), stressing that the CFTC may rely on authority beyond the CEA in addressing misuse of MNPI.[1] Miller noted that sports‑related event contracts, such as those tied to player injuries or performance, present heightened risks, especially where team personnel have access to nonpublic information. The CFTC has entered into an information-sharing arrangement with Major League Baseball to monitor and address potential misconduct in these markets.
Miller acknowledged ongoing litigation regarding sports-related event contracts, recognizing the unsettled regulatory landscape and tension between federal derivatives oversight and state gaming laws.[2]
Miller noted that exchanges are the first line of defense against insider trading and manipulation. He emphasized their obligations under the CEA’s core principles, including surveillance, compliance procedures, and listing standards. In prediction markets, exchanges should assess contracts for heightened risks and implement controls, such as information-sharing agreements and trading restrictions.
Miller announced that the Division will rescind its February 2025 cooperation policy and issue a new Staff Advisory. Miller explained that, absent aggravating circumstances, eligible parties that self-report, fully cooperate, and fully remediate will have a “clear path” to declination. Cooperation will require full disclosure of relevant facts, preservation of records (including ephemeral communications), and remediation (root-cause analysis, compliance improvements, restitution, and disgorgement). Under CFTC policy, full cooperation further includes sharing internal investigation findings without waiving privilege, making personnel available for interviews, making good-faith efforts to secure overseas documents, and continuing to report relevant conduct to the Division.
Aggravating factors, such as senior management involvement or recidivism, may preclude declination. The CFTC’s revised cooperation policy will require a careful risk and benefit analysis to determine whether to self-report and cooperate in a CFTC investigation.
In light of Miller’s remarks, companies should consider taking the following steps:
Miller’s remarks underscore the need for firms to ensure that policies, controls, and training address the use of nonpublic information across a broad range of trading activities—including prediction markets—and to be prepared to respond effectively to potential misconduct.
[1] See CEA § 4c(a)(4), 7 U.S.C. § 6c(a)(4) (prohibiting trading while in possession of material nonpublic information obtained from a federal government source in breach of a duty or through misappropriation, including stolen government information); id. at §§ 9(d)–(e), 7 U.S.C. §§ 13(d)–(e) (prohibiting misuse of nonpublic information by CFTC personnel and by employees of exchanges and self-regulatory organizations).
[2] The CFTC has advocated for the position that event contract-based prediction markets fall within its federal jurisdiction. On April 2, 2026, the CFTC and DOJ jointly filed suit against three states in an attempt to enforce exclusive federal jurisdiction over prediction markets involving event contracts. United States v. Illinois, No. 26-cv-3659 (N.D. Ill. filed Apr. 2, 2026); United States v. Connecticut, No. 26-cv-498 (D. Conn. filed Apr. 2, 2026); United States v. Arizona, No. 26-cv-2246 (D. Ariz. filed Apr. 2, 2026); Commodity Futures Trading Commission, CFTC Sues Trio of States to Reaffirm Its Exclusive Jurisdiction Over Prediction Markets, Release No. 9206-26 (Apr. 2, 2026). See also North Am. Derivatives Exch. Inc. v. State of Nev. ex rel. Nev. Gaming Control Bd., No. 25-7187 (9th Cir. filed Nov. 14, 2025); Brief for the Commodity Futures Trading Commission as Amicus Curiae, North Am. Derivatives Exch. Inc. v. State of Nev. ex rel. Nev. Gaming Control Bd., No. 25-7187 (9th Cir. filed Feb. 17, 2026).