In “Congressional Inaction Is a Bad Bet for Prediction Markets,” Howard Fischer and Adam Brody, former federal and state prosecutors, examine the growing compliance and enforcement challenges posed by prediction markets.

Drawing on recent examples of alleged insider trading and market manipulation, they explain how these markets create unique legal risks by allowing individuals to profit from confidential information or influence the outcomes on which wagers are placed. They discuss the limitations of the current regulatory framework, including the CFTC’s role and the challenges of applying traditional securities laws to prediction markets. They argue that congressional action is needed to establish clear regulatory authority, disclosure and surveillance requirements, and meaningful civil and criminal penalties to protect market integrity and address potential abuses.