Your Earnings Call Is a Betting Line. Do Insider Trading Laws Apply to Prediction Markets?
Prediction markets have quietly turned every scheduled corporate disclosure into a tradeable event. The controls most compliance teams run point at their own shares, and the UK rules that would police this channel were written around instruments these contracts sidestep.
Start with the behaviour, not the law. A contract that pays out if a named chief executive uses a particular phrase on the next earnings call is no longer a thought experiment: venues now list exactly these single-actor events, and the capital behind them (Kalshi's $1 billion raise at an $11 billion valuation, plus ICE's committed stake in Polymarket) is the size that builds infrastructure, not novelties.
Now the law, and here Britain matters more than the American coverage suggests. The UK's criminal insider-dealing regime lives in Part V of the Criminal Justice Act 1993, and its reach is wider than shares. Schedule 2 extends the definition of securities to options, futures and contracts for differences, the legal class into which a financial spread bet falls. A spread bet on a company's share price, placed on inside information, is therefore not obviously outside the Act. The civil regime, retained UK Market Abuse Regulation, reaches further still, catching not just instruments admitted to trading but derivatives whose value depends on them.
Then comes the gap, and it is a precise one. Both regimes hang on a link to a security or a financial instrument. A spread bet references the share price, so it inherits that link. A binary contract on whether an executive utters a phrase does not, because its payout derives from a person's conduct rather than from any instrument's price. On the plain words of Schedule 2 and of UK MAR's scope, that second contract looks like it sits outside the perimeter both regimes were written to police. The information is identical. The instrument is not, and the statutes are built around the instrument.
Is a bet on an earnings call insider dealing under UK law?
On the current text, probably not, and that is a finding about drafting rather than about who deserves what. This is analysis, not settled law: no reported UK case has tested a behavioural event contract against Part V, and a court could read Schedule 2 more purposively than I have. My working view is that the outcome is genuinely open, which is the exact condition under which risk gets mispriced. Markets price ambiguity as zero until a case forces a number onto it.
Is this the FCA's problem or the Gambling Commission's?
The UK splits these markets at the seam that matters. Financial spread betting is a regulated activity supervised by the FCA. A fixed-odds bet on whether an event happens is gambling, licensed by the Gambling Commission under the Gambling Act 2005. A prediction-market contract on a corporate event straddles that line: framed as a derivative it is the FCA's, framed as a wager it is the Commission's, and the insider-dealing rules live only on the FCA side. Classification, not conduct, decides which rulebook applies, and the venue picks the framing.
How the US frame differs
American commentary tends to blur three regimes that need keeping apart. Securities law, meaning the Rule 10b-5 insider-trading theory and its misappropriation branch, attaches to fraud "in connection with the purchase or sale of any security", so a bet that is not a security strains it. Wire fraud under 18 U.S.C. §1343 needs a scheme to defraud and an interstate wire, not a security, which is why (as a hypothesis, not a decided case) it is the more plausible route to a charge. The separate question of whether these are lawful event contracts at all sits with the CFTC under the Commodity Exchange Act, and remains contested rather than settled. Three regimes, three different answers; collapsing them is how the "surely this is illegal" instinct goes wrong.
Why the scheduled disclosure is the leak, not the trade
Policing the bettor is the wrong end of the pipe. The exposure originates inside the organisation, in the ordinary rhythm of corporate communication. Firms already classify earnings dates, guidance language and the timing of official statements as sensitive, and they guard that information against leaking into their own equity. Most have not extended the same controls to a market that trades the same events under a different name.
The asymmetry is the point, and I offer it as argument rather than established fact. An employee, or an associate of one, who knows what will be said and when meets a market with no natural counterparty holding better information. In a normal secondary market, informed and uninformed traders correct each other. In a bet on one insider's scheduled action, the informed trader can be the only person who actually knows. US congressional researchers have themselves flagged that these single-event contracts raise unresolved questions about trading on non-public information.
The clause a board can adopt on Monday
The fix is unglamorous and within reach today. Extend the information-control perimeter you already run for your own securities to any market that trades your scheduled actions, and write it into the insider policy in plain words. Here is a clause a general counsel could paste in before the next board meeting:
Covered persons must not trade, nor procure or encourage any other person to trade, in any instrument, contract or wager whose outcome references the Company's financial results, guidance, announcements, executive statements or other scheduled disclosures, on any venue and whether or not that instrument is a security. This prohibition applies during closed periods and at any other time the person holds inside information, and sits alongside the Company's existing dealing, pre-clearance and blackout rules.
That single clause does the work three separate defences would otherwise leave open: it removes the "it wasn't a share" argument, it captures tipping as well as dealing, and it binds the conduct however a venue chooses to classify its own product. Add monitoring, name it in training, and the gap closes without waiting for a regulator to close it for you. Mapping this kind of low-probability, high-consequence exposure is the work a board's technical strategy function should own before an incident, and treating it as a governance and information-security problem gives it a known shape.
None of this rests on a regulator staying quiet. Enforcement postures are administrative choices, not repeals, and treating a pause as permission prices the tail at zero. The part boards keep underweighting is reputational: if a bet on a company's disclosure goes wrong in public, the venue is not the name in the headline, the company is, and that damage lands whether or not any securities or gambling law was technically broken. The firms that lose here will be the ones who assumed that because the trade happened somewhere else, the responsibility did too.
Questions people ask
Can an employee legally bet on their own company's earnings call in the UK?
It is genuinely unsettled. The Criminal Justice Act 1993 catches dealing in contracts for differences, so a spread bet on the share price can be in scope, but a binary contract on what an executive says references no security's price and may fall outside both that Act and UK MAR. Treat it as an open legal question rather than a green light, and assume a regulator could view it very differently.
Should a corporate insider-trading policy mention prediction markets?
Yes. The cheapest control is a clause banning trading, or encouraging others to trade, on any venue whose contracts reference the company's scheduled disclosures or executive statements, whether or not the contract is a security, folded into the existing blackout and pre-clearance rules.
Who carries the reputational risk if someone front-runs a disclosure on a betting venue?
The company whose calendar was traded, not the platform. The public story is about your information leaking, and that damage lands whether or not any securities or gambling law was technically broken.
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Written by an AI editorial persona of Abyshire's proprietary editorial system and reviewed by our team.