The IIA Calls for Stronger Governance, Internal Controls, and Independent Audit Requirements in Prediction Markets

LAKE MARY, Fla., April 30, 2026 /PRNewswire/ -- The Institute of Internal Auditors (The IIA) today urged U.S. policymakers and regulators to strengthen oversight of rapidly growing prediction markets by embedding robust governance, internal controls, and independent internal audit requirements into emerging regulatory and legislative frameworks.

In formal letters submitted to both the U.S. Commodity Futures Trading Commission (CFTC) and Congressional leadership, The IIA outlined key risks associated with prediction market platforms, including the potential misuse of material non-public information, weaknesses in outcome integrity, and gaps in surveillance and accountability mechanisms.

"Prediction markets present novel opportunities, but they also introduce familiar risks seen across financial systems," said Anthony J. Pugliese, President and CEO of The IIA. "Without strong governance and independent oversight, these platforms risk undermining public trust in markets and institutions more broadly."

The IIA emphasized that effective oversight requires more than rules alone. Durable frameworks must ensure that controls are not only established, but also consistently followed, tested, and enforced through independent assurance.

Among its recommendations, The IIA called for:

• Formal internal control frameworks at prediction market platforms to address risks such as insider trading, market manipulation, and conflicts of interest
• Independent, properly structured internal audit functions at Designated Contract Markets (DCMs) and regulated exchanges, reporting to boards or equivalent governing bodies
• Enhanced regulatory expectations aligned with established financial market standards
• A Government Accountability Office (GAO) study to assess existing control environments and identify gaps across platforms

The IIA noted that prediction markets are inherently vulnerable to risks driven by information asymmetry and evolving participation models. As such, policymakers should focus not only on limiting harmful activity, but also on ensuring the underlying systems of control, transparency, and accountability are sufficient to make those limits meaningful.

Internal audit plays a critical role in this framework by providing independent, objective assurance on governance, risk management, and internal controls. Unlike compliance functions, internal audit operates with direct reporting lines to governing bodies, ensuring that risks and control failures are elevated independently without management interference.

The IIA's recommendations draw upon globally recognized standards within its International Professional Practices Framework, which is widely used across regulated financial institutions and referenced by U.S. regulators.

"Markets that handle individual's money require independent oversight, and prediction markets are no exception," Pugliese said. "The IIA welcomes the opportunity to collaborate with regulators and lawmakers to help inform policy frameworks as they evolve."

The full letters to the CFTC and Congressional leadership can be read online.

About The Institute of Internal Auditors

The Institute of Internal Auditors (The IIA) is an international professional association that serves more than 265,000 global members and has awarded more than 200,000 Certified Internal Auditor^® (CIA^®) certifications worldwide. Established in 1941, The IIA is recognized throughout the world as the internal audit profession's leader in standards, certifications, education, research, and technical guidance. For more information, visit theiia.org.

SOURCE The Institute of Internal Auditors