WASHINGTON (TNND) — Prediction markets that let users wager on everything from war to elections are drawing new scrutiny after suspicious bets were placed ahead of a U.S. strike on Iran, prompting the Senate to move to block members of Congress and their staff from using the platforms.
Just hours before the U.S. initially struck Iran in late February, anonymous bets were placed on the prediction market platform Polymarket. Multiple accounts cashed out on the surprise attack, raising questions about potential insider trading.
The Senate unanimously passed a bill last week that would ban senators and their staff from using prediction market platforms. Senate Minority Leader Chuck Schumer, D-N.Y., warned against allowing lawmakers to profit from events tied to their official duties.
“We must never allow Congress to turn into a casino where members representing the public can gamble on wars, or economic crises, or elections,” Schumer said Thursday. “That would destroy the very principle of representative government.”
Sen. Bernie Moreno, R-Ohio, said the goal is to prevent lawmakers and staff from using nonpublic information for personal gain.
“What we’re doing is allowing our constituents to know once and for all that no member of the United States Senate, no member of the staff of the United States Senate can ever use that inside information to use as a way to monetize this job whatsoever,” Moreno said Thursday.
Pressure is now building on the House to take similar action.
Polymarket and Kalshi, another major prediction market platform, have taken steps to sanction and block insider trading. A U.S. soldier was charged by the Department of Justice for using Polymarket to bet on the Venezuelan raid he was allegedly a part of earlier this year. Political candidates from around the country were individually sanctioned by Kalshi for bets on their own races.
A group pushing for federal regulation of prediction markets, rather than a state-by-state framework, said it supports efforts in Congress to curb betting based on inside information. Sean Patrick Maloney, president and CEO of the Coalition for Prediction Markets, said the Senate action is a positive step and suggested the House should consider following suit.
The House will make its own decisions, but I would absolutely think that it’s another good step to guarantee that government insiders not be profiting from information they derive from taxpayer-funded jobs to profit personally. We support all those efforts,” Maloney said.
The industry has also drawn attention because President Trump’s son, Donald Trump Jr., is deeply involved in it, while President Trump said last month he does not support prediction markets.
“The whole world, unfortunately, has become somewhat of a casino,” Trump said on April 23rd. “And you look at what’s going on all over the world in Europe and every place they’re doing these betting things. I was never much in favor of it.”
The push to prohibit prediction market trading in Congress could also increase pressure for a broader ban on stock trading by members of Congress, an effort that has stalled for years.