As prediction markets keep growing, Washington has started taking a closer look at how they operate and whether they can be abused through insider access or sensitive information.
Platforms like Polymarket and Kalshi now sit at the center of a political and regulatory debate that spans from Congress to the White House.
Lawmakers question prediction market activity
Concerns escalated after reports showed users on Polymarket placing highly specific bets around sensitive geopolitical events. One case involved wagers tied to a potential United States and Iran ceasefire date, where new accounts made large profits after accurately timed positions. Separately, betting activity appeared around a U.S. military rescue operation involving an airman whose fighter jet had been shot down.
Rep. Seth Moulton, D-Mass., strongly criticized the platform after sharing a screenshot of the betting activity. He said, “This is war profiteering, and Congress needs to step in and stop it,” and accused the industry of failing to police itself. Following public backlash, Polymarket halted a related market and said it “does not meet our integrity standards.”
The platform’s moderation response did little to ease concerns among lawmakers, who say these markets can turn sensitive real-world events into speculative betting opportunities.
Insider trading worries drive policy pressure
The issue has gained rare bipartisan attention in Congress, especially around the risk that users could profit from nonpublic government information. Lawmakers pointed to cases involving large gains tied to political outcomes, including a user who reportedly earned more than $400,000 on a bet involving Venezuela’s leadership.
Sen. Todd Young, R-Ind., said the situation raised alarms after reports surfaced of unusual trading patterns. Along with Sen. Elissa Slotkin, D-Mich., he has backed legislation aimed at stopping federal employees from using confidential information for prediction market trading.
The Commodity Futures Trading Commission, which oversees regulated U.S. markets, has also been pulled into the debate. Its leadership has said oversight remains a priority even as staffing levels and enforcement capacity have come under scrutiny.
During a House Agriculture Committee hearing, acting CFTC head Michael Selig said, “Nothing is more important than protecting market integrity,” while defending the agency’s ongoing regulatory work.
Meanwhile, Kalshi, one of the main U.S.-regulated platforms, says it already bans certain categories of high-risk betting markets and supports tighter oversight. A spokesperson said, “We support Congress and regulators taking action to police insider trading, keep prediction markets onshore and under federal regulation. Not all prediction markets are the same.”
Europe starts shaping its own rules
While the U.S. debates enforcement and oversight, European policymakers are beginning to explore how prediction markets should fit into their financial and digital systems.
In Malta, officials are studying whether a formal legal framework should be created for prediction markets as part of a broader digital economy strategy.
At the same time, global trading activity in prediction markets continues to rise, with platforms reporting significant volume growth and rising valuations. Still, regulation remains uneven, with different countries taking separate approaches.
For now, lawmakers on both sides of the Atlantic appear to agree on one thing: prediction markets are no longer a niche experiment, and the pressure to set clearer rules is only getting stronger.
Source:
Wanna bet? Washington steps up scrutiny of prediction markets, apnews.com, April 17, 2026
