Payouts to unnamed bettors after the ouster of former Venezuelan President Nicolás Maduro and the U.S. attack on Iran put prediction markets in the spotlight. Now, lawmakers are trying to block elected officials from getting rich off them.
A previously unreported bill led by Sens. Jeff Merkley, D-Ore., and Amy Klobuchar, D-Minn., being introduced on Thursday would ban the president, vice president and members of Congress from trading event contracts — which allow users to wager on the outcome of specific events. It would also limit prediction market activity for senior executive branch officials and impose fines starting at $10,000 for violators.
“Members receive all sorts of tips and advice,” Merkley said in an interview. “The actual demonstration of insider trading is too difficult to be sufficient to address the problem. The problem becomes both real corruption … and the appearance of corruption and conflict of interest.”
The new legislation is unlikely to become law in the Republican-controlled Congress, but it may serve as a regulatory building block for the nascent industry.
Prediction markets like Polymarket and Kalshi are surging in popularity and allow users to place bets on the outcome of a wide-range of events. Some are trivial, like basketball games and Oscars best picture winners. Others are weightier, like who will win specific political races and whether or not the Federal Reserve will cut interest rates.
