Senate Moves to Ban Prediction Market Betting by Lawmakers and Staff

The Senate has taken a unanimous step to block its own members, staff, and officials from betting in prediction markets. These platforms allow anonymous users to wager on the outcome of future events, including US government decisions, and have recently drawn attention after traders earned large sums by correctly anticipating military actions.

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Concerns grew that such activity could signal insider trading, with bets on geopolitical outcomes raising both ethical and national security alarms. Senator Elissa Slotkin, a Democrat from Michigan and former C.I.A. analyst, warned that insider trading on these platforms poses “an operational risk.”

The measure was sponsored by Senator Bernie Moreno of Ohio, who emphasized the need for integrity in public service. “Serving in Congress is an honor, not a side hustle, Americans deserve to know that their leaders are here for the right reason,” he said. 

Bill follows multiple cases of insider trading 

The Senate’s move to ban prediction market betting came after a string of troubling cases that showed how insider information could be exploited for profit.

Investigators found at least 16 accounts that earned more than $100,000 by correctly predicting a February strike on Iran, just hours before U.S. and Israeli forces carried out the attack that killed Ayatollah Ali Khamenei.

In another case, a U.S. Army Special Forces soldier was accused of using classified intelligence to make over $400,000 on Polymarket by wagering on the fall of Venezuela’s president, Nicolás Maduro. He pleaded not guilty this week, but each charge of disclosing classified information carries a possible sentence of up to ten years in prison.

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These incidents pushed lawmakers to act. Senator Chuck Schumer praised the Senate’s decision and urged the House to follow suit, saying: “We must never allow Congress to turn into a casino where members representing the public can gamble on wars or economic crises or elections.”

A ban to cover all government officials also in the works

Senator John Curtis of Utah welcomed the Senate’s decision but argued it should go further. He has joined forces with Representative Elissa Slotkin and Senator Todd Young of Indiana on a bill that would extend the ban to every government official and employee, including the president and vice president.

Under the proposal, anyone caught betting in prediction markets would face fines equal to double the profit made.

The push for wider restrictions comes as platforms themselves admit insider trading has been a problem. Kalshi recently disclosed that it sanctioned three political candidates for trying to trade on their own congressional bids. The company identified an independent Senate candidate in Virginia, a former Republican candidate in Texas, and a Democratic state senator from Minnesota now running for Congress.

Both Kalshi and Polymarket have said they support the Senate’s action. Kalshi’s chief executive, Tarek Mansour, explained that the company “proactively blocks members of Congress” from trading. Spokeswoman Elisabeth Diana added that Kalshi uses a “politically exposed persons’ list” to filter out those at risk of insider trading, saying: “If they hit that list, they can’t trade.”

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Source: The New York Times