A resolution to prohibit trading in prediction markets by Senate Members and Staff has been unanimously approved by the U.S. Senate. This rule change, introduced by Senator Bernie Moreno (R-Ohio) and passed without a formal vote, went into effect immediately upon the Senate’s adoption of S. Res. 708. The ban on prediction markets follows several scandals that have eroded the public’s confidence. Recently it was found that an army soldier had placed successful bets totalling over USD 400,000 on Polymarket based on classified information about the capture of Venezuelan President Nicolás Maduro.
The marine was subsequently arrested.
Source: U.S. Senate
Purpose of the prediction markets ban
The purpose of the resolution is to prevent insider trading based on whether Senators/Staff may have non-public information related to Legislation, Military Action, or Diplomatic Results. “Engaging in any way in a prediction market or trying to place bets where we might have inside information deteriorates our confidence that our constituents have in us,” said Moreno in a speech delivered on the Senate Floor. Although the ban currently only pertains to the Senate, Representative Ashley Hinson (R-Iowa) also announced that she will introduce legislation in the House to implement a similar ban.
Support from prediction platforms
Polymarket and Kalshi supported the ban. “Our Rulebook & Terms of Service already prohibit such conduct, but codifying this into law is a step forward for the industry,” Polymarket said on X. Kalshi founder Tarek Mansour said, “a great step to increase trust in our markets,” adding, “Now, let’s pass this in the House!”
High profiles profiting from prediction markets: Recent Antecedents
The announcement of the rule change comes on the heels of numerous high profile incidents in which this practice has been a focal point of concern by elected officials and interest groups within the political arena (e.g., the Army Master Sergeant Gannon Ken Van Dyke, who placed a USD 33,000 wager on whether Nicolas Maduro would be ousted from power by January 31st). After the successful execution of a U.S. military operation, this person’s bet paid out over USD 400,000. And recently, the soldier was charged with using classified intelligence to benefit financially from his wager.
Last week, Kalshi announced that they had fined and suspended three political candidates for placing bets on their own elections. Minority Leader Chuck Schumer stated that he was glad to see this rule change and urged other members of Congress to consider doing the same. Schumer has said that it is important to ”not allow Congress members to change Congress into a gambling operation, with Congress members betting against the country during a time of war or economic crisis.”
