Wanna bet? Washington steps up scrutiny of prediction markets
[April 17, 2026] By
STEVEN SLOAN and KEN SWEET
WASHINGTON (AP) — As the United States was preparing a daring mission to
rescue an airman whose fighter jet was shot down by Iran, there was
money to be made.
Users on Polymarket, the world's largest prediction market, could place
bets on when the airman would be rescued. When Rep. Seth Moulton,
D-Mass., shared a screenshot of the activity on social media, an April 3
rescue was trading at 15% compared with 63% who were betting on April 4.
After Moulton posted the screenshot and blasted this “dystopian death
market,” Polymarket stopped the betting, saying the market “does not
meet our integrity standards.”
A former Marine who served four tours in Iraq, Moulton said he was
“absolutely not satisfied with Polymarket's response” and blamed the
site for being “completely unwilling to self-regulate when it comes to
betting on the lives of our service members.”
“This is war profiteering and Congress needs to step in and stop it,” he
said.
A confrontation is brewing in Washington over prediction markets, the
online exchanges that allow users to bet on the outcome of everything
from a baseball game to when Jesus Christ will return.
In a highly polarized Congress, the need to guard against the prediction
markets being used for insider trading has become rare common ground.
Members of both parties pressed the leader of a typically low-profile
regulatory agency on the issue during a hearing on Thursday. The market
debate is also drawing in the White House, potential presidential
candidates and state leaders.
“It's a national conversation about what it means to have market
integrity,” said Kristin Johnson, a former commissioner at the Commodity
Futures Trading Commission, which regulates prediction markets in the
U.S.
In a capital that was slow to respond to the perils of tobacco, opioids
and social media, the push to put guardrails on prediction markets has
been uncommonly swift.
The markets, which include Polymarket and its chief rival Kalshi, have
been criticized for everything from undermining the integrity of sports
to contributing to an online betting addiction crisis among young men.
Polymarket has come under particular scrutiny as a venue for offshore
trades that are beyond the reach of U.S. regulators.
Donald Trump Jr., the president's son, is on Polymarket's advisory board
and is a paid adviser for Kalshi. 1789 Capital, the venture capital firm
where Trump Jr. is a partner, has invested in Polymarket.
Well-timed trades catch Washington's attention
The Associated Press reported this month that a group of new accounts on
Polymarket made highly specific, well-timed bets on whether the U.S. and
Iran would reach a ceasefire on April 7, resulting in hundreds of
thousands of dollars in profits for these new customers.
On the same day the report was published, the White House warned staff
against using private information to trade on prediction markets.
Earlier this year, an anonymous Polymarket user collected more than
$400,000 on a January bet predicting the ouster of Venezuelan President
Nicolás Maduro, prompting concerns that someone with access to private
U.S. government information may have engaged in insider trading.
Sen. Todd Young, an Indiana Republican and former Marine, said he had
been concerned about trading in the sports market, “but I became
especially concerned about market distortions, improper decision making,
and undermining of public trust through self-enrichment after the news
broke about Venezuela.”
Young and Sen. Elissa Slotkin, D-Mich., have introduced a bill that
would bar federal employees from using nonpublic information to make
bets on prediction markets. Their bill is among several bipartisan
efforts in Congress to regulate prediction markets.
As he eyes a potential presidential campaign, Democrat Rahm Emanuel
proposed a ban on prediction market bets by all federal employees and
their families. On Wednesday, he suggested a 10% fee on those markets
and online gambling to fund science and health research.
California Gov. Gavin Newsom, another potential Democratic presidential
candidate, issued an executive order barring his appointees from using
nonpublic information to trade on prediction markets.
For now, there's no immediate path to passage for any of the bills. But
the scrutiny has drawn focus to the differing approaches of the main
prediction markets.
Polymarket officials say little publicly and didn't comment for this
story. The market, founded in 2020, operates largely offshore with
limited functions in the U.S. that were allowed only after President
Donald Trump returned to office.
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An advertisement for prediction market platform Kalshi hangs at 13th
and L Streets in northwest Washington, April 1, 2026. (AP
Photo/Allison Robbert, File)
 Kalshi, meanwhile, says it already
bans many of the most extreme betting markets and welcomes
regulation.
“We support Congress and regulators taking action to police insider
trading, keep prediction markets onshore and under federal
regulation," said Kalshi spokesperson Elisabeth Diana. "Not all
prediction markets are the same.”
White House spokesman Davis Ingle said Trump has
been clear that "members of Congress and other government officials
should be prohibited from using nonpublic information for financial
benefit.”
Prediction markets bring CFTC into the spotlight
The bet-the-event activity is drawing attention to the Commodity
Futures Trading Commission, which oversees the vast trading
contracts industry, including prediction markets.
Dennis Kelleher, the president and chief executive of Better
Markets, a Washington nonprofit that has pressed for stronger
oversight of prediction markets, said the agency "certainly has no
experience, expertise, budget, technology to actually in any way
supervise, regulate or police gambling on everything from whether
it’s Iran, Venezuela, whether it’s reality TV, whether Christ is
going to come back before the end of the year.”
The agency, which by law is supposed to have a five-member board
including representatives of both political parties, is served now
by only one member, Michael Selig, a former CFTC law clerk who went
on to represent cryptocurrency clients before Trump appointed him to
lead the agency.
That's sparked concern among congressional Democrats. Sen. Richard
Durbin, D-Ill., sent Selig a letter in February noting that the
number of enforcement attorneys at the agency's Chicago office had
declined from 20 to zero.
During a Thursday hearing of the House Agriculture Committee, which
oversees the CFTC, Selig said the agency was hiring new staff and
operating more efficiently. He refused to hold off on completing new
regulations until new members were added to the board but insisted
he was taking the potential of insider trading seriously.
“Nothing is more important than protecting market integrity,” he
said.
Still, the agency's enforcement authority extends only to prediction
markets regulated in the U.S.
For now, that distinction largely applies to Kalshi, which was
established in 2018 and promotes its status as a regulated
prediction market. Eager to reach American customers, Polymarket has
introduced a U.S.-only prediction market platform to conform with
U.S. regulations, but that platform currently has a waitlist to
participate and is a small fraction of the size of its offshore
counterpart.
CFTC's leadership criticizes Biden and takes on states
Asked at a recent Vanderbilt University forum about the CFTC's
approach to insider trading in unregulated offshore prediction
markets, Selig blamed the Biden administration for creating a
regulatory environment that he said discouraged companies from
operating in the U.S.
As the debate plays out in Washington, multiple states have tried to
curtail prediction markets, arguing they are essentially operating
as unlicensed gambling platforms. But the CFTC has responded
forcefully to assert itself as the sole regulator, suing
Connecticut, Arizona and Illinois this month.
That leaves Washington at a strange juncture, with widespread
agreement among lawmakers that something should be done to address
the issue of prediction markets. But there are differing thoughts on
the scope of a solution.
Young acknowledged his proposal is just a first step, and said
lawmakers have a lot to learn about prediction markets.
“But I think we can all agree at this early stage, as usage of these
platforms grows and real money is put at stake, that this is a
measure that should be taken immediately,” he said.
___
Sweet reported from New York. Associated Press writer Susan Haigh in
Hartford, Connecticut, contributed to this report.
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