Senate Bans Prediction Market Trading After Insider Betting Scandals

The United States Senate unanimously passed a bill banning senators and their staff from using prediction market platforms like Polymarket and Kalshi. The action followed reports of suspicious betting activity ahead of a February U.S. strike on Iran, where anonymous accounts cashed out on the surprise attack, raising alarms over the monetization of nonpublic intelligence.

Parallel to legislative action, the Department of Justice indicted Army Special Forces sergeant Gannon Ken Van Dyke on five counts, including wire fraud. Van Dyke allegedly used his security clearance to turn $33,000 into more than $400,000 by betting on the capture of Venezuelan President Nicolás Maduro. Similar security breaches involving an Israeli Air Force major and bets on Iranian leadership have also emerged, leading experts to warn that public blockchain ledgers may allow foreign intelligence to monitor secret military operations.

Following the Senate's lead, Representatives Ashley Hinson and Dina Titus introduced separate resolutions to bar members of the House of Representatives and their staff from such trading. Earlier, Senators Kirsten Gillibrand and David McCormick proposed a broader bipartisan bill to prohibit the president, vice president, and senior executive branch officials from these markets while granting the Commodity Futures Trading Commission authority to ban bets on war and terrorism.

In the executive branch, President Donald Trump expressed opposition to the rise of global betting culture. At the state level, Illinois Governor JB Pritzker issued an executive order barring state employees from leveraging insider information in these markets.