Washington — Sen. Catherine Cortez Masto has urged the US Commodity Futures Trading Commission to strengthen oversight of prediction markets following a series of trades linked to the apparent removal of Venezuelan President Nicolás Maduro that raised concerns about possible insider trading and national security risks.

In a four-page letter sent Sunday to CFTC Chairman Michael Selig, the Nevada Democrat cited “anomalous” trading patterns surrounding contracts on Polymarket that predicted Maduro’s ouster. An anonymous trader placed roughly $30,000 in wagers that Maduro would be removed from power just hours before US forces raided his compound in Caracas. The trader ultimately received a payout of approximately $436,000.

While Cortez Masto acknowledged that there is no definitive evidence the trader possessed inside information, she wrote that the timing of the transactions warrants heightened scrutiny. Nearly a dozen Democratic senators co-signed the letter. “This improbable increase in trades against Maduro’s continued authority in Venezuela mere hours before Maduro’s capture exemplifies the dangers of unregulated gaming,” Cortez Masto wrote.

Polymarket US is a CFTC-registered Designated Contract Market but has not fully launched domestically. The Maduro trades were apparently executed outside the United States. Cortez Masto argued that the transaction nonetheless highlights the absence of consistent safeguards against insider trading across global prediction markets.

National security concerns

Cortez Masto’s warning carries particular weight given her background in law enforcement and public service. She served as Nevada’s attorney general from 2007 to 2015, previously worked as a federal prosecutor in Washington, DC, and held senior roles in Nevada state government.

In her letter, the senator linked prediction-market integrity directly to US national security. Under CFTC Rule 40.11, event contracts tied to war, assassination, or terrorism are prohibited if they are deemed contrary to the public interest. Cortez Masto warned that even the listing of sensitive geopolitical contracts could expose strategic information. “If event contracts are manipulated by insider information, or merely listed, foreign adversaries may exploit that information to their advantage,” she wrote.

Beyond the Maduro contract, Polymarket currently hosts markets on multiple high-risk geopolitical events. One contract on whether the US military will strike Iran by 30 June has drawn at least $16.8 million in trading volume. Another allows trading on whether a ceasefire between Iran and Israel will collapse by 31 March; on Tuesday, that contract was trading at 70 cents, implying a $142.86 payout on a $100 position.

The letter arrives amid escalating political and regulatory pressure on prediction markets.

On Monday, the American Gaming Association and the Indian Gaming Association jointly urged Congress to restrict what they described as illegal sports betting and casino gambling conducted under the label of “event contracts.” The groups asked lawmakers to include prohibitions in forthcoming cryptocurrency market structure legislation that would bar gambling on CFTC-registered platforms.

At the state level, enforcement actions are mounting. At least nine states have issued cease-and-desist orders against Kalshi over the past year. Last week, Tennessee sent similar orders to Kalshi, Polymarket, and Crypto.com, demanding that they halt the offering of sports event contracts to residents. Kalshi has argued that such state actions are preempted by federal law under the Commodity Exchange Act, setting up an intensifying legal battle between state regulators and federal authorities over jurisdiction.

Prediction markets must not become a vehicle for insider trading or a vulnerability to US national security.

CFTC under pressure

During his Senate confirmation hearing in November, Chairman Selig acknowledged that ensuring event contracts are not susceptible to manipulation is “vital” to the CFTC’s mission. Cortez Masto’s letter includes nine specific concerns focused on the detection and prevention of insider trading within prediction markets. A CFTC spokesperson did not immediately respond to requests for comment.

As trading volumes on politically and militarily sensitive events continue to expand, the confrontation between innovation, market freedom, and regulatory control is rapidly becoming one of the most consequential unresolved issues in US financial oversight.