WASHINGTON, D.C—Amid escalating news reports that federal employees and anonymous traders are earning substantial sums making bets tied to anticipated government actions, Democracy Defenders Fund today petitioned the U.S. Office of Government Ethics to prohibit federal officers and employees from participating in prediction markets tied to official government actions.

As prediction markets surge in popularity, there’s been a stunning pattern of apparent insider trading on platforms like Polymarket. Traders have placed suspiciously accurate winning bets worth millions of dollars on military activity including the war in Iran and the U.S. arrest of Venezuela's president.

“While insider trading is illegal, and the Standards of Ethical Conduct have long barred government employees from using confidential information for private profit, the current framework is not sufficient” said Virginia Canter, director and chief counsel for ethics and anti-corruption at DDF. “ There is mounting evidence that government insiders are using prediction markets to cash in and profit off of sensitive government information. Government officials and lawmakers must step up now to stop government employees from exploiting access to non-public information for their own self-enrichment.”

Existing laws prohibit misuse of government information, but they are insufficient, the petition states. Prediction markets carry unique risks, including low barriers to entry and cryptocurrency anonymity. A particularly troubling risk for national security is the incentive for bad actors to alter government actions to protect their wagers.

DDF’s petition outlines widely reported instances of alleged insider trading via prediction markets, including:

• Eight accounts placed longshot bets hours before U.S. strikes on Iranian nuclear facilities in June 2025, netting more than $1.8 million.

• Six accounts raked in $1.2 million before U.S. strikes on Iran in February 2026.

• More than 50 accounts, many of them first-time traders, placed substantial bets on a U.S.-Iran ceasefire hours before President Trump announced the agreement.

• In late April 2026, the Department of Justice indicted U.S. Army Master Sergeant Gannon Ken Van Dyke for allegedly purchasing event contracts predicting the capture of Venezuelan President Nicolás Maduro—mere hours before he helped execute the operation.

• Between January 2021 and March 2026, traders wagered more than $54 billion on Polymarket alone. A recent analysis found that nearly 52% of longshot bets on military and defense-related contracts were placed on winning outcomes, which suggests widespread misuse of non-public government information.

“The risks cannot be overstated,” said Chris Swartz, senior ethics counsel at DDF. “We are in uncharted territory. How can the American public have confidence that government officials are acting in their best interest when an Army official can bet on the timing of a foreign capture and anonymous traders can make millions off strikes in Iran? The answer is simple: they can’t. That is why we are calling on OGE to ban trading on these types of events to restore public trust."

The petition specifically requests OGE to apply the ban broadly.

Separately, DDF’s sister organization, Democracy Defenders Action, urged House leadership to adopt a ban for members, staff, and their families.

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Democracy Defenders Fund brings together a nonpartisan team to work with national, state and local allies across the country to defend in real-time the foundations of our democracy.