EU watchdog flags widespread insider trading in prediction markets

An EU regulator published a review finding widespread use of non-public information on online prediction markets in Europe. The analysis identified trading patterns the regulator says are consistent with market abuse, including large, concentrated wagers placed shortly before key events.

The review examined activity on multiple platforms that offer contracts tied to election outcomes, corporate deals such as mergers and takeovers, and the timing of regulatory decisions. It flagged trades made by accounts linked to decision-makers and repeated trades that appear coordinated to move prices ahead of public announcements.

The regulator reported three main problems. First, some persons with privileged access used event-specific non-public information to profit from bets. Second, many platforms have weak identity checks, making it harder to link accounts to real users. Third, limited transaction reporting on several platforms reduces the ability of supervisors to detect suspicious activity.

The review noted that some platforms operate with minimal oversight while accepting users from across EU member states. That cross-border access complicates enforcement because national supervisors and prosecutors must coordinate to investigate potential abuse.

The report recommends closer cooperation between national financial supervisors, criminal prosecutors and platform operators. It calls for stronger data-sharing arrangements, clearer rules on who may trade in event-based markets and tighter controls on accounts that show rapid or concentrated trading before sensitive announcements.

The regulator asked platform operators to provide transaction logs, user verification records and details of any internal surveillance systems. Regulatory officials warned that the findings could lead to targeted investigations and asked firms to review their compliance systems.

“We found repeated patterns consistent with market abuse,” the report states. The regulator said it will continue to monitor trading patterns and discuss the findings with EU member states and industry participants to determine next steps.