House Oversight Committee calls for restrictions on prediction markets

Prediction markets built a user base trading event outcomes the way bettors once used offshore sportsbooks, with Kalshi operating under a CFTC license it secured after a 2024 fight over election contracts, and Polymarket running largely offshore on Polygon. Congress already polices its own members' trading through the STOCK Act, and that same insider-trading logic is now being extended to the executive branch and military personnel who can access both classified briefings and these platforms.

Federal employees, troops and security-clearance holders could lose the ability to place bets tied to events they have inside knowledge of, from policy decisions to military operations. Kalshi and Polymarket would need to identify government accounts and either restrict their activity or flag suspicious trades, adding compliance costs neither platform currently budgets for. Agencies, in turn, may have to issue new ethics guidance spelling out what federal personnel can wager on at all. (per theblock.co)

Prediction markets sell themselves as tools that aggregate information through open, often pseudonymous trading, which is precisely what makes them attractive to someone trading on a tip. Restricting federal personnel without a way to verify who is actually placing a bet on an offshore platform like Polymarket exposes the gap between what regulators can mandate and what they can enforce, a tension that will outlast this particular memo. (per cryptobriefing.com)

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