As prediction markets expand to cover corporate, regulatory, and geopolitical events, organizations face new compliance risks when employees, directors, or other insiders possess nonpublic information that could affect the value of event contracts.

In this post, we examine the first insider trading case involving prediction markets, discuss the government’s position that existing insider trading and antifraud principles apply to these markets, and outline practical steps organizations can take to strengthen their governance frameworks. We also explore why existing insider trading, confidentiality, and code of conduct policies may be insufficient and provide recommendations for updating policies, training, and compliance controls to address this emerging risk area.

Read our analysis of the evolving regulatory landscape and the measures organizations should consider to mitigate legal, reputational, and compliance risks associated with prediction market activity.