Campaign Insiders Use Nonpublic Polling Data to Reap Large Gains on Prediction Markets

(AsiaGameHub) –   Campaign employees are reportedly leveraging poll data they receive as part of their jobs to place bets on prediction markets, resulting in significant financial gains.

These staffers gain access to poll data before it is publicly released. Once published, these polls can influence the odds on prediction market platforms like Polymarket. The practice involves staff members trading on these markets before a poll’s release and then cashing out once the market odds shift accordingly.

An individual working anonymously for a statewide campaign in the Southern United States shared with NPR how they have successfully used this strategy to earn thousands of dollars.

In one instance, a newly released poll indicated a substantial lead for a particular candidate. Despite the campaign staff’s skepticism about the poll’s accuracy, they anticipated that its public release would cause a significant shift in the odds on prediction markets regarding that candidate’s election victory.

“Myself and others started placing bets before that poll came out,” the staffer disclosed. “And then, sure enough as soon as that poll came out, the stock went up and everybody made money.”

The staffer mentioned that they personally profited thousands of dollars from trading on a single market alone.

Staff Admit It’s “Foolish Not to Profit” From Insider Information

“Because you have all this information and knowledge that isn’t publicly available yet, it’s almost foolish not to bet on it before it’s made public,” the staffer stated.

However, if discovered, these individuals could face penalties from the prediction market platforms where they traded, as well as potential legal prosecution.

While the exact definition of insider trading remains somewhat ambiguous, lawmakers are increasingly pushing for clearer regulations to prevent further scandals.

The US Senate has recently enacted a rule barring Senators from trading on prediction markets, but this prohibition does not currently extend to campaign staff. There are also ongoing calls for the Commodity Futures Trading Commission (CFTC) to adopt a more assertive stance.

Rep. Ritchie Torres has announced his intention to introduce legislation aimed at strengthening the rules governing campaign insiders trading on political prediction markets.

The Fight Against Insider Trading

The campaign staff acknowledged trading on Polymarket and another prediction market platform, PredictIt. Following a series of controversies, Kalshi and Polymarket updated their insider trading policies in March.

Polymarket has stated that it now prohibits users who have the ability to influence the outcome of an event from trading on those specific markets. Furthermore, the platform has declared that it forbids trading based on stolen confidential information and illegal tips.

The company elaborated on what constitutes trading on stolen confidential information, specifying that “participants may not trade on any contract if they possess confidential information about the outcome or likely outcome of the underlying event, where using that information would violate a preexisting duty or obligation of trust or confidence owed to another person or entity.”

Was This Insider Trading?

It remains unclear whether the political campaign staff were explicitly instructed not to trade on prediction markets.

If an individual trades using privileged information and has an obligation not to disclose or misuse it, this would be considered insider trading by the CFTC, according to former regulator Carl Kennedy, who spoke to CasinoBeats.

Kennedy also highlighted that “If you are a registered exchange … one of your roles is also to be a regulator deputized by the CFTC to police your own market.”

Polymarket played a role in the arrest of US soldier Gannon Van Dyke for betting on the capture of Nicolas Maduro, an operation in which Van Dyke was directly involved. Despite this, the platform continues to facilitate trading on wars and conflicts, even though these activities are expressly prohibited by CFTC regulations.

When contacted for comment on whether campaign staffers trading on election outcomes violates the platform’s rules, the company did not respond.

Another former CFTC employee, Jeff Le Riche, suggested that the campaign staff’s employment agreements would determine if their trades contravened the organization’s regulations.

“There’s probably a pretty good argument that they’re using information that they’re not supposed to use for their benefit,” Le Riche commented.

This situation underscores the challenges in regulating individuals who trade on prediction markets and is likely to bolster the argument against allowing election betting altogether.