Congress Considering Crackdown on Prediction Markets
Jesse M. Cox Published 17/06/2026
There are mounting suspicions that government officials are profiting from access to classified information that they are using to make successful trades on prediction market sites. This is leading to concern about national security. Congress is facing growing pressure to take action to put a stop to such illegal insider trading.
Some federal lawmakers are beginning to push for measures that would place more stringent regulations on prediction market sites like Kalshi and Polymarket. The White House and Congressional leaders have already issued warnings to employees and members that anyone caught utilizing insider trading will face the full extent of the law.
Some members of Congress are pushing for anti-insider trading legislation
Some Congressional members are not willing to stop at suggesting proposals for guardrails on prediction market insider trading. A few are seeking to enact legislation to completely close this potential loophole. Republican Rep. Blake Moore from Utah introduced a bill. His legislation would ban betting contracts involving election results, general government activities, wars, assassinations, and terrorism. It would also prohibit action on recreational events or illegal activity considered to be “contrary to the public interest.”
“Our classified military strikes should not provide an opportunity for bettors to play or profit,” Moore said while introducing his bill on the House floor.
Other members of Congress believe that members like Moore are overreacting to a minor problem.
House Financial Services Committee Chairman French Hill was recently speaking at a conference hosted by Semafor. The Republican from Arkansas expressed confidence that the prediction market regulations were solid. He also feels that Congressional members aren't well-schooled on how event trading works.
“It’s a little hard to legislate and get out front on policymaking when you have members that don’t have that basic understanding of current law,” Hill told Semafor’s Eleanor Mueller.
Hill indicated that he believes in the leaders of the CFTC and SEC. “[They] have the primary responsibility of demonstrating that they’re able to oversee these markets in the right way in compliance with the law,” Hil said.
Hill’s committee oversees agencies that regulate prediction markets. That means his resistance carries significant weight.
There's plenty of evidence of insider trading
The first person to face charges of insider trading on a prediction market site was a member of the U.S. military. Army Master Sgt. Gannon Ken Van Dyke was indicted. He won money on Polymarket trading on the capture of Venezuelan President Nicolas Maduro. VanDyke was a U.S. Army Special Forces member involved in that mission.
According to the New York Times, 13 Polymarket accounts made over $600,000 making trades on the timing of Israel attacking Iran. Seven other accounts made $1.4 million trading that a U.S. ceasefire with Iran was imminent.
CFTC moving to eliminate insider trading options
The Commodities Futures Trading Commission (CFTC) is the federal regulator of prediction markets. The CFTC is looking to stay ahead of the curve on this issue. It proposes to eliminate event contracts that involve war, assassination, and terrorism.
“The Commission believes that event contracts that involve terrorism, assassination, or war present national‑security harms, extraordinary information leakage risks, and perverse incentive effects that overwhelm any potential informational utility,” the CFTC noted in a statement about this proposal.
There's been a massive explosion in the use of prediction markets over the past year. In April 2025, Kalshi and Polymarket, the leaders in the prediction market industry, handled $1.8 billion in trades. In April 2026, the same two sites would handle $23.8 bilion in trades.