U.S. federal prosecutors are investigating whether betting activities in certain prediction markets violate insider trading laws

According to CNN, citing multiple sources, federal prosecutors in Manhattan, New York, are investigating whether some high-yield bets in prediction markets violate insider trading and other laws.

According to insiders, the head of the Securities and Commodities Fraud Unit of the U.S. Attorney's Office for the Southern District of New York recently met with representatives from Polymarket to discuss how existing laws might apply to potential misconduct in this rapidly evolving industry. The U.S. Department of Justice is focusing on those high-profile high-yield bets, marking an escalation in regulatory scrutiny of the industry. Over the past year, the prediction market industry has rapidly expanded with relatively limited federal oversight.