Democrats and Republicans Agree on Something: Don't Bet on It Happening

Lawmakers from both parties are converging on an unusual point of agreement: prediction markets may have gone too far. Yet even as Congress moves to tighten oversight, the Trump administration's support for the platforms-and regulators' reluctance to intervene-leaves the bipartisan push facing long odds.

The rise of platforms like Kalshi and Polymarket, which gained widespread attention after poll‑beating forecasts during the 2024 presidential election, has been accompanied by growing unease over their regulation-and over whether traders can profit from advance knowledge of military or political events.

Such fears have this week prompted several bills to be introduced in the House and Senate, bearing both Republican and Democratic signatures, aimed at clarifying how these markets are regulated and who should be allowed to take part.

This flurry began on Monday, with Democratic Senator Adam Schiff and Republican John Curtis introducing the Prediction Markets Are Gambling Act, which would prevent entities regulated by the Commodity Futures Trading Commission (CFTC), including Kalshi and Polymarket, from offering event contracts which resemble "a sports bet or casino-style game."

"Too many young people in Utah are getting exposed to addictive sports betting and casino-style gaming contracts that belong under state control, not under federal regulators," said Curtis.

Curtis and Schiff's legislation primarily concerns the regulatory gray area of whether event contracts should be treated as gambling-subject to state regulation-or, as the prediction markets maintain, as financial instruments falling within the federal purview.

But most of this week’s legislation foregrounds the ethical side of the debate-brought into the spotlight with the Iran war-and argues that existing regulations on prediction markets are insufficient to prevent insiders from profiting from non-public information about geopolitical developments.

The Preventing Real-time Exploitation and Deceptive Insider Congressional Trading (PREDICT) Act, as its name suggests, attempts to directly clamp down on lawmakers and senior government officials, including the president, from "trading on the outcomes of political events, policy decisions, and other government actions on prediction markets."

The legislation was introduced by Nebraska Republican Representative Adrian Smith and Nikki Budzinski, an Illinois Democrat. The latter said instances of "little-known traders making massive profits on events ranging from war with Iran to how long a government shutdown will last," had raised "necessary questions about the use of inside information."

And this concern-that those privy to decision-making in D.C. may be profiting from their nonpublic knowledge-has prompted other measures like the Public Integrity in Financial Prediction Markets Act of 2026, with support from both parties and across both chambers.

"Prediction markets have turned democracy itself into a casino by allowing gambling on American elections, government actions, or military intervention," Patrick Woodall, managing director at the nonprofit Americans for Financial Reform, said in a statement supporting the analogous Democratic-led STOP Corrupt Bets Act.

Amid this heightened legislative scrutiny, and several states suing these platforms for facilitating what they view as gambling operations in violation of state laws, Kalshi and Polymarket on Monday pre-emptively announced their own set of guardrails to prevent "insider trading and market manipulation."

Kalshi said it would bar "politicians, athletes, and other relevant people" from trading on events in which they hold a stake, and told Newsweek in a statement that this "builds off of the extensive work we’ve been doing to ban and police insider trading."

Polymarket, meanwhile, highlighted its existing mechanisms for investigating and penalizing insider trading, while clarifying what would fall within this already banned category: Trades based on "stolen or confidential information," on "illegal tips," and by individuals "who can influence the outcome" of a given contract.

According to I. Nelson Rose, an expert on gambling law, these announcements appear a preemptive attempt by both platforms to prove they are capable of self-regulation and "prevent being outlawed by Congress."

Eric Zitzewitz, a professor of economics at Dartmouth College known for his research into prediction markets, similarly told Newsweek that "it is strongly in both exchanges’ interest" to eliminate insider trading, but that enforcement of this will require criminal penalties and therefore government involvement.

And those sponsoring this week's bills remain unconvinced.

"I don't think it's enough," Schiff told CNBC. "Because it's one thing to say, ‘This is our policy.' It's another actually to put into place the steps to make sure it's not happening on those platforms."

But any of these nascent legislative efforts to enhance and localize oversight will come up against opposition from the administration of President Donald Trump-whose eldest son Donald Jr has stakes in both Polymarket and Kalshi-and regulators, who appear to have sided with the prediction markets both on the question of insider trading as well as which laws should govern their operations.

The CFTC, for its part, believes sufficient safeguards already exist to prevent any widespread financial misconduct on prediction markets. The agency told Newsweek that existing laws on insider trading still apply, and noted that it has "deep experience regulating these markets for decades," as well as the necessary staff and surveillance tools to monitor for illegal activity.

Despite concern that insiders may be profiting from nonpublic information on the Iran war and other geopolitical developments, the White House is similarly confident. When approached for comment, one official noted the extensive ethics guidelines that already govern gambling by government employees and the use of non-public information for personal gain.

And the Trump-nominated CFTC Chairman Michael Selig has been a vocal advocate for prediction markets as they resist state-level oversight. In an article for TheWall Street Journal in February, Selig argued that event contracts "serve legitimate economic functions" and that the agency alone holds regulatory authority.

"The CFTC will no longer sit idly by while overzealous state governments undermine the agency's exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products," he wrote.

Prediction markets currently sit at an unusual political crossroads-viewed by many lawmakers as an encroachment on states' authority and a breeding ground for novel ethical risks, but defended by regulators who see no need to change existing regulations.

In the end, the bipartisan bet may be one Congress is unlikely to win.

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This story was originally published March 27, 2026 at 9:10 AM.