While prediction markets are booming – allowing anyone to bet on nearly everything from sports to elections to who’s going to win season 50 of “Survivor” – the little-known federal agency that regulates the industry has shrunk to its smallest size in 15 years.
The Commodity Futures Trading Commission workforce has dropped by 24% since President Donald Trump returned to office, according to the latest available data, raising concerns about its ability to police insider trading and protect consumers.
Lawmakers, former officials and government watchdogs have sounded the alarm after seeing well-timed bets about US military strikes against Iran and Taylor Swift’s engagement that suggested traders may have cashed in on government secrets or insider information.
Those worries came to a head last week, when federal authorities arrested a US special forces soldier who was involved in the operation capturing Venezuelan leader Nicolás Maduro, and allegedly profited more than $400,000 by betting about the raid. In addition to criminal charges, the CFTC sued the soldier to secure restitution, impose penalties and ban him from future trading.
The CFTC is also reportedly investigating suspicious oil futures trades that were made shortly before Trump announced major policy changes regarding Iran.
The agency is at the center of an increasingly fierce debate over the future of once-obscure prediction platforms, which are treated like financial exchanges rather than online casinos. They have exploded in popularity over the past year, and now see billions of dollars in weekly trading volume.
The landmark insider-trading charges from the Maduro raid only scratch the surface of the potential problem, experts say. Lawmakers, former federal officials and the CFTC’s own watchdog have warned that deep staffing cuts could hobble the agency as it tries to keep pace.
“There were cuts that were not exactly logical,” said a former top CFTC official, who asked to remain anonymous to speak candidly. “They targeted people who were experienced and well-regarded. Real enforcement lawyers were fired. And there was a major reduction in trial attorneys.”
In an interview with CNN before the Maduro raid charges were announced, the Trump-appointed CFTC chair Michael Selig acknowledged he’s trying to fill some vacancies that were created last year by the Elon Musk-backed Department of Government Efficiency, or DOGE. But he also said advances in artificial intelligence are streamlining the work for the remaining employees.
“To the extent there are any gaps, we’re filling those gaps,” Selig said. “But thanks to our renewed focus on efficiency, and bringing on new technologies, we are operating more effectively and efficiently than we ever have before.”
He added: “There are no gaps in our ability to fulfill our mission.”
Selig said AI is helping evaluate public comments submitted for the ongoing rulemaking about prediction markets. He also said staffers can now use the Microsoft Copilot chatbot to develop memos, reports and presentations.
In addition, AI is automating the process for companies registering with the CFTC, which has traditionally been “done through email and manual processes,” Selig said. Corporate applications to run exchanges tied to prediction sites are “historically high,” according to a recent CFTC report.
“Utilizing software and other AI tools has taken a bit of pressure off many of the positions that are no longer filled due to the DRP,” Selig said, using an acronym for the deferred resignation program that DOGE used to incentivize thousands of federal workers across the US government to quit their jobs.
The CFTC’s enforcement division saw some of the steepest drops last year. And Selig has only asked Congress to fund 108 employees in that area, compared to 140 filled positions in 2025 — which would be a 23% reduction.
The agency’s office in Chicago — considered the birthplace of modern futures trading — fell from 20 enforcement lawyers to zero, Barron’s reported.
Lawmakers from both parties pressed Selig, 36, earlier this month at his first hearing as CFTC chair, on whether he needs additional funding, more staffing or new laws to properly oversee prediction markets.
Some of Selig’s Democratic critics praised his pledge to crack down on insider trading and said they could work together on legislation. But many weren’t convinced that the CFTC has enough employees to meet the moment.
“I have deep concerns around the ability they’ll have to provide the proper oversight that taxpayers in this country deserve from the CFTC,” Rep. Nikki Budzinski, an Illinois Democrat, told CNN after questioning Selig at the hearing. “He referred to efficiencies, which to me, is code for mass layoffs.”
Budzinski proposed a bipartisan bill to ban executive branch political appointees, the president, lawmakers, their families and others from betting on government actions on prediction sites. Since the Selig hearing, at least two more Democratic lawmakers have signed onto Budzinski’s legislation.
Some Democrats used the hearing to highlight what they called the “corruption” of how Trump-appointed regulators are supporting prediction markets in ways that could financially benefit the president and his family.
Trump’s social media company has announced plans to launch its own prediction platform, and his son Donald Trump Jr. is a paid adviser to Kalshi and an investor in Polymarket, the two most popular prediction sites.
The Trump administration approved Polymarket last year to start offering trades for American customers, but its US-facing site isn’t fully operational yet. Its highly popular international platform – unfettered by federal regulations that prohibit trading related to assassination and war – has been criticized for offering bets about life-and-death matters like the Iran war.
Experts have identified numerous alarming examples of possible insider trading on Polymarket before US military action, including the Maduro raid that led to criminal charges last week.
Kalshi issued $2.2 million in refunds and now faces lawsuits after a disputed market about the tenure of Iran’s Supreme Leader Ali Khamenei, who was killed at the start of the war. And three congressional candidates engaged in “political insider trading” on the site by betting on their own races, which Kalshi found and punished last week after an internal probe.
The companies are required by law to self-regulate, and Selig told lawmakers that the companies are the “first line of defense” to stop insider trading. After the CFTC approves a company to run a prediction market exchange in the US, the company self-certifies that its individual offerings comply with federal law.
CNN has a partnership with Kalshi and uses its data to cover major events. Editorial employees are prohibited from participating in prediction markets.
Spokespeople for Kalshi and Polymarket declined to comment for this story.
After a year of DOGE’s layoffs, buyout offers, and early retirement incentives, the agency shrank to 535 by February.
Even if Congress granted Selig’s request for $410 million and 650 full-time jobs, the CFTC would still be smaller than during most of Trump’s first term.
The CFTC’s mission was expanded by the Dodd-Frank Act in 2010, passed in the wake of the financial meltdown and Great Recession. Staffing peaked above 700 in 2015 before falling to an average of 670 from 2018 to 2024 and hitting 700 again near the end of President Joe Biden’s term.
“They’re going to have a lot of work to do, and they are going to have to triage,” the former CFTC official said. “Some stuff will go unaddressed. They won’t be able to pursue as many matters as they would’ve at full strength.”
The former official said this dynamic could force the CFTC to avoid arduous and potentially yearslong lengthy negotiations by “settling on the cheap.” They pointed to a case against KuCoin, a cryptocurrency exchange, that the CFTC settled in recent weeks for $500,000. The Justice Department secured a much larger $297 million deal regarding the same illegal conduct.
The workforce cuts occurred under acting CFTC chair Caroline Pham, a Republican who was nominated by Biden in 2021 to serve on the bipartisan commission.
Trump elevated Pham to acting chair last January. In that role, she filled her X feed with Trumpisms. She once touted a “yuge” announcement, shared a photo of herself wearing a red MAGA hat that said, “Make CFTC Great Again,” and also re-posted a supportive message from Musk and DOGE.
Pham didn’t respond to multiple requests from CNN for comment. She left the CFTC in December when Selig was confirmed by the GOP-run Senate.
“I personally experienced that staffing needs often dictate what is prioritized and what is not,” said Noah Solowiejczyk, a former federal prosecutor who worked with the CFTC on financial cases. “There are real questions as to whether they have enough staff in enforcement to really handle this issue.”
The commission that oversees the CFTC is depleted, with four of five seats currently vacant at the independent federal agency.
House Democrats pointed out at Selig’s recent hearing that under federal law, the commission is supposed to have five members nominated by the president, with two from the minority party. Trump hasn’t made any appointments.
“It’s the president’s decision,” Selig told CNN. “I’m willing and happy to work with whoever the president chooses to appoint, whether that’s five commissioners or whatever else. I leave those decisions to the president.”
The White House did not respond to CNN’s request for comment about the vacancies.
After the Maduro-related insider trading indictment was announced Thursday, Trump told reporters that, “The whole world, unfortunately, has become somewhat of a casino.”
Last month, the White House warned staff against insider trading on prediction markets with information from their government jobs. A White House spokesman previously said, “any implication that Administration officials are engaged in (insider trading) without evidence is baseless and irresponsible reporting.”
In response to questions from House Democrats, Selig repeatedly said the CFTC has “zero tolerance” for insider trading, even if it were to come from Republicans, the White House or the Trump family.
“I think he is somebody we can work with,” Rep. Eugene Vindman, a Virginia Democrat, told CNN in an interview. “But cutting staff at a time when the mission is growing is not a good idea. This is creating real vulnerabilities.”
For some experts in this space, these challenges were foreseeable.
The Democratic CFTC chair under Biden, Rostin Behnam, flagged the risks of sports and election markets in 2024. While initiating a federal rulemaking process to outlaw these products, Behnam warned they would “push the CFTC … into a position far beyond its Congressional mandate and expertise.”
Selig withdrew that proposed rule in February, six weeks after taking over.
