EU regulator ESMA declares that prediction markets are ‘rife with inside trading,’ and its risk monitor identifies inside trading in prediction markets across three cited episodes. The monitor cites new wallets that made $1.2 million hours before February’s strike on Iran, Bubblemaps tracing nine linked accounts to $2.4 million of Iran bets that won 98% of the time, and a U.S. Army master sergeant charged over about $400,000 of Polymarket profits tied to the capture of Nicolás Maduro.

Inside Trading in Prediction Markets — ESMA Risk Monitor Episodes

ESMA’s risk monitor reports multiple instances it describes as inside trading in prediction markets and lists three specific episodes. Episode 1 details new wallets that earned $1.2 million hours before a February strike on Iran. Episode 2 notes that Bubblemaps traced nine linked accounts to $2.4 million of Iran-related bets that won 98% of the time. The monitor presents these entries as part of its assessment of market integrity.

Episode 3 involves a U.S. Army master sergeant who was charged after about $400,000 of Polymarket profits tied to bets on the capture of Nicolás Maduro. The monitor also records an April incident in which suspected tampering with weather sensors used to settle Polymarket contracts prompted Météo-France to file a police complaint. The risk monitor lists these events alongside other observations about market activity. The monitor frames the episodes as examples illustrating integrity concerns in prediction markets.

The ESMA risk monitor includes these episodes in its broader review of prediction-market activity. They are presented as part of the regulator’s assessment of market integrity.

Trading volumes on major prediction-market platforms surged after ESMA began collecting data, with Kalshi reported at $8.8 billion as of November 2025 and Polymarket at $12 billion by January 2026. By June 2026 The Block estimated combined monthly volume at $44.8 billion, of which Kalshi accounted for $31.5 billion.

Kalshi’s activity is concentrated in sports, which represent 73% of its volume, while Polymarket’s volume is spread across politics, sports and crypto. Reporting by Bloomberg found most Polymarket users lose money, and the Wall Street Journal reported that 67% of Polymarket gains went to 0.1% of accounts. These figures form part of ESMA’s broader concerns about inside trading in prediction markets.

Regulatory and industry responses to allegations of inside trading in prediction markets have included public statements and disputes among market participants. Polymarket’s chief legal officer Neal Kumar said, ‘It’s not anonymous—you will be found just like this guy.’ At a CFTC roundtable in August, CME’s Terry Duffy and Kalshi’s Luana Lopes Lara clashed over manipulation concerns. Kalshi and Polymarket block access in some EU countries, and it is unclear why not all EU member states are excluded.

Prediction markets face significant regulatory scrutiny and challenges related to inside trading and jurisdictional complexities. The comments and disputes above illustrate industry and regulatory engagement with those issues.