The bill comes at a time when major international events, such as the ouster of former Venezuelan President Nicolas Maduro and the Iran war, have drawn bets on prediction markets such as Kalshi and Polymarket.
- Senator Jeff Merkley stated that he first became concerned about prediction markets after a bettor on Polymarket won more than $400,000 by accurately predicting that the U.S. would remove Maduro.
- He added that it was “extraordinarily likely” that somebody in the group of people who knew about the U.S. action leaked the information to a bettor on the prediction platform.
- A New York Times analysis found more than 150 Polymarket accounts placed bets of over $1,000 predicting last Saturday’s U.S.–Israel strikes on Iran a day early.
Democratic lawmakers led by Senators Jeff Merkley and Amy Klobuchar are reportedly set to introduce a bill banning the President, Vice President, and members of Congress from placing bets on prediction markets.
The bill comes at a time when major international events, such as the ouster of former Venezuelan President Nicolas Maduro and the Iran war, have seen bets placed on prediction markets such as Kalshi and Polymarket.
“Members receive all sorts of tips and advice. The actual demonstration of insider trading is too difficult to be sufficient to address the problem. The problem becomes both real corruption … and the appearance of corruption and conflict of interest,” Merkley said during the interview.
The Venezuela Bet That Made Merkley Suspicious
Merkley stated that he first became concerned about prediction markets after a bettor on Polymarket won more than $400,000 by accurately predicting that the U.S. would remove Maduro.
“That was a case where you had the secretary of state saying ‘we didn’t notify Congress the way we’re supposed to under the law because we were too concerned about a leak,’” Merkley said during the interview.
He added that it was “extraordinarily likely” that somebody in the group of people who knew about the U.S. action leaked the information to a bettor on the prediction platform.
“This legislation strengthens the Commodity Futures Trading Commission’s ability to go after bad actors and provides rules of the road to prevent those with confidential government or policy information from exploiting their access for financial gain,” Sen. Klobuchar said in a statement to CNBC.
Soaring Popularity Of Prediction Markets
According to an analysis by The New York Times, a day before the joint U.S.-Israel strikes on Iran Saturday last week, more than 150 accounts placed bets of at least $1,000 on Polymarket, accurately predicting attacks on the Middle Eastern country.
The analysis also showed that at least 16 accounts profited by more than $100,000 each, while at least 109 accounts made more than $10,000.
One user reportedly took home nearly half a million dollars after placing bets worth over $60,000.
Israeli Army Reservists Arrested Over Suspicion Of Using Classified Information
Earlier in February, the Israeli authorities arrested several army reservists and a civilian over suspicion of using classified information to place bets on an online prediction platform.
Israeli authorities said that the charges came after an investigation into suspected gambling “based on classified information to which the reservists were exposed by virtue of their role in the army,” according to a report by The New York Times.
Meanwhile, U.S. equities declined in Thursday’s pre-market trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 43%; the Invesco QQQ Trust ETF (QQQ) fell 0.56%; and the SPDR Dow Jones Industrial Average ETF Trust (DIA) declined 0.72%. Retail sentiment on Stocktwits regarding the S&P 500 ETF was in the ‘neutral’ territory.
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