Following concern over insider trading, the U.S. Senate today voted unanimously to ban its members and staff from using prediction markets that can be used to make anonymous bets on future events, including geopolitical events involving the U.S.

This comes a week after three congressional candidates from Minnesota, Texas and Virginia were fined and suspended for “political insider trading” after using the Kalshi platform to bet on the future of their own campaigns. The two Democrats and one Republican were caught out after the platform had introduced “technological guardrails” to prevent inside trading.

It was the same kind of scrutiny that led to a U.S. special forces soldier who had won over $400,000 after making a bet through the prediction market, Polymarket. The soldier had predicted the removal of Venezuelan President Nicolás Maduro, who was later captured in a U.S. operation that the soldier had been part of.

Such wagers have raised fears that U.S. national security and future operations could be put at risk, not to mention that ethical considerations of profiting from betting on classified operations and geopolitical events.

The New York Times reported that prior to the U.S.-Israel strike on Iran, more than 150 accounts on Polymarket “placed hundreds of bets of at least $1,000.” Some 109 accounts bet over $10,000, many of the bets being made at the “11^th hour.” Since the bets are made with cryptocurrency, identities can remain obscured.

Today, Democratic members of Congress called on the Commodity Futures Trading Commission to implement a rule that will prevent “insider trading and corruption in the market and prohibits event contracts on the outcome of elections, war and military actions in the U.S. or abroad, sports, and government actions without a valid economic hedging interest.”

Senator Chuck Schumer, Democrat of New York and the minority leader, said Congress cannot be allowed to “turn into a casino” where members can “gamble on wars or economic crises or elections.” Senators also called for measures to ban the use of prediction markets for the House and their staff.

Kalshi Chief Executive Tarek Mansour welcomed the news, writing on X, “I applaud the Senate for passing this resolution to ban Senators and their offices from trading on prediction markets.”

Polymarket also channeled its view on the matter via X, with the company saying it already prohibits insider trading, but “codifying this into law is a step forward for the industry.”

Photo: Pexels