Senate bans members from prediction markets as insider trading scrutiny grows

The US Senate unanimously passed a rule Thursday barring senators and staff from trading on prediction markets, as lawmakers move to limit conflicts of interest in one of the fastest growing corners of financial speculation.

The ban takes effect immediately and targets platforms such as Kalshi and Polymarket, where traders can wager on political, geopolitical, sports, and economic outcomes. The measure follows rising concern that officials with access to sensitive information could use event contracts for personal gain.

The rule comes as prediction markets scale rapidly. Kalshi was valued at $22 billion in a recent funding round, while Polymarket has reportedly been in talks to raise $400 million at a valuation of about $15 billion.

Trading activity has also surged. Reuters estimated Kalshi and Polymarket could handle $96 billion and $84 billion in 2026 trading volume, respectively, showing how quickly the sector has moved from niche betting venue to mainstream market infrastructure.

The Senate vote followed several enforcement flashpoints. On April 22, Kalshi said it suspended and fined one Senate candidate and two House candidates for trading on their own races.

A day later, US Army Special Forces soldier Master Sgt. Gannon Ken Van Dyke was arrested on charges that he used classified information to profit from Polymarket wagers tied to the US military mission involving Nicolás Maduro. AP reported that the Senate ban was driven partly by concerns over classified information being used for financial gain.

Earlier Thursday, Democratic lawmakers also urged the CFTC to restrict event contracts tied to elections, war, military actions, sports, and government decisions unless they serve a valid economic hedging purpose.