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ESMA warns prediction markets face insider-trading risks

Regulation

ESMA warned in its latest risk report that prediction markets face risks of insider trading, wash trading and coordinated manipulation. It said limited identity checks and multiple accounts can hinder detection, and cited cases including newly created wallets that allegedly made $1.2m before the February 2026 US-Israel strikes on Iran. ESMA said the EU market remains relatively limited but recommended continued monitoring.

The warning may inform regulatory monitoring of prediction-market platforms and their trading controls.

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Regulation

US election leaves prediction market legal disputes before courts

The US mid-term election brought Democrats control of the House and Senate, while state regulators and prediction-market operators continue to dispute the legality of sports event contracts. New Jersey Attorney General Jennifer Davenport asked the Supreme Court in September to review whether federal law prevents states from regulating those contracts; a law professor quoted in the report said he expects the court to hear the challenge.

New Jersey Atty. Gen. Jennifer Davenport petitioned the Supreme Court in September to consider whether states may regulate sports offerings on prediction markets. Democrats took control of both the House and the Senate in the mid-term election.

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