The US Attorney for the Southern District of New York, Jay Clayton, is investigating bets on prediction markets that may have violated insider-trading laws. The prediction market volume is increasing, with monthly trading volume now at $20 billion, up from $1.2 billion in 2025. Major market makers are involved in matching trades, and major banks are now embracing them as an indicator of where the "smart money" is gauging the outcome of major financial events such as interest rate decisions by the Federal Reserve or hostile takeovers. The rise in prediction market activity has led to increased scrutiny from financial authorities and concerns about fraud. No companies have been accused of wrongdoing.