The Senate voted unanimously on Thursday to ban senators, their staff and other chamber officials from participating in prediction markets, in which anonymous users can bet on a certain outcome of future events, including major policy decisions of the U.S. government.
The ban passed after some users in prediction markets won hundreds of thousands of dollars by successfully anticipating U.S. military action in recent months, raising suspicions of insider trading on websites like Polymarket and Kalshi.
The questionable wagers have raised ethical and national security concerns because a surge in betting on certain geopolitical outcomes could indicate an imminent action by the U.S. military or its allies. Senator Elissa Slotkin, Democrat of Michigan and a former C.I.A. analyst who served tours in Iraq, called potential cases of insider trading on prediction markets “an operational risk.”
Senator Bernie Moreno, Republican of Ohio, who sponsored the measure that passed on Thursday, said: “Serving in Congress is an honor, not a side hustle, Americans deserve to know that their leaders are here for the right reason.”
At least 16 accounts made more than $100,000 after correctly predicting a February strike on Iran, hours before the surprise U.S. and Israeli attack on top Iranian officials that killed Iran’s supreme leader, Ayatollah Ali Khamenei.
A U.S. Army Special Forces soldier who helped capture President Nicolás Maduro of Venezuela in January has been accused of using classified information to make more than $400,000 on Polymarket by predicting the leader’s fall, a charge to which he pleaded not guilty on Tuesday. Each count of disclosure of classified information can be punished by up to 10 years in prison.
Senator Chuck Schumer, Democrat of New York and the minority leader, praised the ban and urged Speaker Mike Johnson to push for a similar measure that bans prediction market participation by members of the House and their staff.
“We must never allow Congress to turn into a casino where members representing the public can gamble on wars or economic crises or elections,” Mr. Schumer said on the Senate floor on Thursday.
Senator John Curtis, Republican of Utah, also celebrated the passing of the measure and called for expanding such a ban to all government officials, echoing some government watchdogs that had pushed for the prohibition.
Mr. Curtis has teamed with Ms. Slotkin and Senator Todd Young, Republican of Indiana, on a bill that would impose a prediction-market ban on all government officials and employees, including the president and the vice president. It would fine violators the amount equal to double the profit made in a bet through prediction markets.
Both Kalshi and Polymarket have announced that they will take steps to guard against insider trading on their platforms, but cases of self-dealing appear to abound.
Kalshi revealed last week that it had sanctioned three political candidates for trying to make trades on their own bids for Congress. The three candidates were an independent running for Senate in Virginia, a former Republican congressional candidate in Texas and a Democratic Minnesota state senator who is running for Congress, according to Kalshi.
Minho Kim reports on breaking news for The Times from Washington.
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