As prediction markets on war, politics, and sports continue to occupy the headspace of legislators across the country, the Senate drew a line in the sand on Thursday – at least for itself.
The chamber of Congress approved a bipartisan resolution on April 30 to ban members and staff from using prediction markets for trading, effective immediately. The change passed unanimously via voice vote on Thursday, two weeks after members of the House of Representatives questioned Commodity Futures Trading Commission (CFTC) Chairman Michael Selig about insider trading.
Sen. Bernie Moreno (R-Ohio) introduced the resolution and presented it on the Senate floor on Thursday.
The resolution amends the standing rules of the Senate to add: “No Member of the Senate may enter into, or offer to enter into, an agreement, contract, or transaction that provides for any purchase, sale, payment, or delivery that is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of a specific event.”
All Senate staff banned from prediction market trading
A press release issued by Moreno clarified that the ban applies to:
- Sitting U.S. Senators
- Senate Officers
- Senate staff
“United States Senators have no business engaging in speculative activities like prediction markets while collecting a taxpayer-funded paycheck, period,” said Moreno in the release. “Serving in Congress should never be about finding new ways to profit; it should be about delivering results for the American people.”
The ban was extended to include staff by Sen. Alex Padilla (D-Calif.), the Associated Press reported.
“What we’re doing is allowing our constituents to know once and for all that no member of the U.S. Senate, no member of the staff of the U.S. Senate, can ever use that inside information as a way to monetize this job whatsoever,” added Moreno in his comments on the Senate floor.
Senate Minority Leader Chuck Schumer (D-NY) called the move a “no-brainer”, added the AP.
“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. “That would destroy the very principle of representative government.”
Senators act after prediction markets insider trading talk
The prohibition comes on the heels of several high-profile instances and reports of insider trading on prediction market platforms such as Kalshi and Polymarket.
In the space of around 24 hours last week, Kalshi announced that it had suspended three political candidates including one would-be senator for trading on their own campaigns. That happened right before a U.S. Army Special Forces soldier was indicted for allegedly using classified information to trade on Polymarket related to the capture of Venezuelan leader Nicolás Maduro.
American Gaming Association hails Senate’s move
In a statement, the American Gaming Association praised the Senate for taking “an important step in addressing one of many concerns surrounding event contracts”.
“The Senate’s unanimous adoption of ethics rules that prevent Senators and their staff from betting on prediction market platforms is an important step in addressing one of many concerns surrounding event contracts,” said a spokesperson. “We applaud this action and further encourage the Senate to pass the Prediction Markets Are Gambling Act to protect their constituents and uphold state and tribal sovereignty.”
Congress might consider further legislative action
As the AGA referenced, Congress may not be done yet.
While the new measure bans Senate staff from trading on prediction markets, several legislative proposals have been filed in Congress that would impose much broader restrictions on the industry.
One, filed by Sen. Chris Murphy (D-Conn), would outright ban event contract trading on government actions, terrorism, war, assassination, and “events where an individual knows or controls the outcome”. Various others would ban the use of insider information to trade on event contracts, ban sports and casino gaming contracts, or take other steps to curb the spread of prediction markets.
Speaking to NBC News last week, Murphy suggested that trying to identify every prediction market trader who might have inside information would be tantamount to “an endless wild goose chase.”
“Staff has inside information, White House staff has more inside information, their friends then have the inside information,” Murphy added. “Their friends’ friends then have the inside information. So you can’t fix this problem by banning people from trading. You can only fix this problem by banning the markets to begin with.”
