Unfortunately, it's not just elected officials that are problematic for prediction markets. The Secretary of War, for instance is not an elected official nor are leaders of the armed forces and there is definitely a prediction market for war. Multiply this by every powerful appointee and every career bureaucrat and see what kind of picture that paints.
If we're not going to ban prediction markets, we could at least make it a requirement that all bets are public and associated with a real identity.
That'd go a long way towards curbing the corruption of these things, while preserving (or even greatly enhancing) their "predictive power."
Sounds like a lot of second cousins are going to make amazing predictions.
Seems like you’d get a secondary proxy market popping up overnight. Like domain privacy for degenerates.
That's why you make the regulations like AML regulations, where it's a crime to obfuscate the source of the wager too.
Domain privacy isn't for degenerates.
They didn't say it was?
And maybe you can start by mandating age verification?
It's always a good idea to disguise your identity collection as "age verification".
THIS — make it transparent, not try to ban it.
And the transparency must be real-time and MUST include the full dox on beneficial owner of the contract/bet, with steep jailtime for falsification/fronting, etc.. They can even say it is for tax purposes — they win that bet, they should pay income tax (and be able to deduct the costs of their losing bets against that specific income type).
I want to know if a bunch of senators or DOD personnel bet on event X, and I want journalists and OSINT watchers to know it in realtime. That gives everyone information while naturally eliminating most of the advantage of insider trading, since nearly everyone will pile into the same trade and the odds/payoff will come closer to the reality.
Knowing who is making the bets doesn’t prevent mildly corrupt officials from driving the outcome that’s going to win them some cash.
Knowing that high-level DOD official were betting on us invading Iran does us no good if the only reason we invaded Iran was so they could win their long-odds bet. Sure, we can try and shame them, but now they're rich and we're fighting another middle-east war.
I guess we shouldn't do this then. If it doesn't completely solve to problem.
The bill also prevents senior government officials from betting on prediction markets if they are participating personally in the event on which they are betting.
https://www.merkley.senate.gov/wp-content/uploads/End-Predic...
It's also low-ranking members of the armed forces that have a lot more information than you'd expect. If you just banned the high ranking members from prediction markets, I actually don't think very much would change. (There would just be slightly more delay.)
If I was a NOAA meteorologist I'd be making bank insider trading temperature prediction markets.
Maybe this could be an alternative funding source for weather prediction, haha.
I mean, North Korea has some very deadly incentives if this whole "buy your prediction" market is brought online.
Don't forget relatives, useful idiots, and billionaire special envoys!
The latter two groups often overlap, even
Congress was not even notified in advance of the wars on Iraq or Venezuela. Any leaks came from the executive branch.
Making insider/true expert information public more quickly in the form of influencing prices in a toy market is THE ENTIRE POINT of prediction markets.
Read the original papers on them.
http://li.mit.edu/Stuff/CNSE/Paper/Hanson90.pdf
True experts need not be the people with the ultimate ability to effect change. Professional sports organizations ban their players from betting on games because it creates bad incentives to throw a winnable game. Banning elected representatives from gambling on prediction markets doesn’t make it impossible for insider information to surface, but it does prevent the governance equivalent of match fixing.
EXACTLY! We want insiders to participate in prediction markets and profit!
Not just insider info. Folks in the government can make those things happen, making the payout for super rare events even higher and more catastrophic. It is obvious how prediction markets could be used to put blind hits out on people.
It makes sense to ban government officials from betting. It's hard enough to enforce insider trading. With legal betting, it's literally impossible.
Another worrying issue with betting is just how prevalent the last election was in betting markets. In elections won by thousands or even just hundreds of votes, betting markets can skew results where betters vote for someone just purely for the bet and persuade, shill for the person they bet on.
I can imagine betters placing a bet on a candidate and then launching a defamation campaign against the other.
Or campaigns could hedge their risk by buying the other guy. They either win the election or get all their expenses refunded.
That's like "South Park" S01E10 (1998);
Damien (South Park) - Wikipedia https://en.wikipedia.org/wiki/Damien_(South_Park) :
> The majority of South Park's residents bet on Satan to win the match due to his enormous size and muscular physique, but Satan ultimately throws the fight and reveals he bet on Jesus, thus winning everybody's money.
> They either win the election or get all their expenses refunded.
How would that work with something like the WH Press Secretary who has refused to give back some $350K in campaign donations (though currently FEC can't prosecute any campaign finance violations because they don't have a quorum because Trump has not nominated and confirmed enough FEC commissioners.)
"David Letterman Was DISGUSTED When Trump Showed His True Character" in re: to promoting professional boxing and boxers: https://youtube.com/watch?v=E9MB4CUraGc :
> As soon as he gets out, he's going to fight in my casinos
> With legal betting, it's literally impossible.
Murphy v. National Collegiate Athletic Association https://en.wikipedia.org/wiki/Murphy_v._National_Collegiate_... :
> State of New Jersey, represented by Governor [Chris Christie], sought to have the Professional and Amateur Sports Protection Act (PASPA) overturned to allow state-sponsored sports betting.
How does Murphy v. National Collegiate Athletic Association affect or affirm states' rights on cannabis regulation and legalization?
Wasn't Christie against Medicalization and Legalization?
IMO it's less fun to see scared gamblers at sporting events.
A quote from the film "Two for the Money":
"See, most gamblers, when they go to gamble, they go to win. When we go to gamble, we go to lose."
Insider trading has been a staple of making money in US politics for a long time, it's just more transparent now.
I don't believe a targeted ban on participating in prediction markets would do much to weed out corruption while "predictions" hide behind government officials pumping memecoins, buying stocks, using proxies, or simply sharing war plans over messaging apps. The floodgates are already open, prediction markets are just the most honest and obvious version of the corruption.
This approach to legislation is an interesting contrast to the CCP's supposed 2.3 million people prosecuted for corruption, if you believe Wikipedia [1].
[1] https://en.wikipedia.org/wiki/Anti-corruption_campaign_under...
I recall a few finance papers saying (paraphrasing) "approximately all private info is reflected in stock prices". The same is obviously true of prediction markets. If government officials are banned, they'll just give a little wink to a relative or friend, and the prediction markets will reflect the private information.
On a personal note, I find these markets incredibly useful in day to day life. There's been a joke for a while that putting site:reddit.com in your google search is the only way to get (some) real information. It's becoming true that putting <search terms> AND (kalshi OR polymarket) is how to get accurate info.
I think you're thinking of the efficient-market hypothesis. The hypothesis is that prices reflect all available information, and "available information" is the key part. The "strong form" includes private information, but research has not found support for this. And even the "semi-strong form" falls apart. For instance, the market for small cap stocks is not as efficient as the market for large cap stocks.
You need a market that has enough people paying attention and doing the work, and you also need a market that has enough liquidity.
Source: I have a PhD in capital markets.
Accurate info on what? Most markets have almost no liquidity, outside of sports and crypto
Political outcomes is the biggest. Businesses (and individuals) can be strongly (financially) affected by who's elected. I'd been very curious in the past about political outcomes but had never used prediction markets, so I built a little tracker that inputed the probabilities based on scraping ~14 betting sites. I had to do it on a market-by-market basis, and there were lots of edgecases. Having them all in one place (or two; kalshi and polymarket) makes life much simpler.
Prediction markets have also directly affected my travel planning, helping me avoid a country that wasn't at war at the time but had (in my judgement) a too-high risk of war.
You're completely right about thinly traded markets; those are way, way less accurate. But they also offer the greatest opportunity for someone to bet the other way, which has the effect of 'correcting' the market.
Elections usually also have good liquidity.
> A Mystery Trader Made $400,000 Betting on Maduro’s Downfall
> Prediction market trader 'Magamyman' made $553,000 on death of Iran's supreme leader
You can review that user’s trade history. It’s a bit weird for sure, but they didn’t just stop in to bet on those. They’ve bet huge sums on every prediction relating to Iran, Israel, sp500, recessions, etc.
They’ve been betting for 2 years but only recently starting profiting a lot.
If they're smart they'll have multiple accounts with bets each way netting to ~0 on all kinds of topics, and just omit the losing trade on the information they actually have.
Aren't there already basic laws against officials profiting from their role?
Prediction markets should just be globally illegal. Nothing good can come from them. Public identity is not a solution, proxies would be used.
> Following multiple public reports on the growing influence of prediction markets and their potential for corruption, Merkley and Klobuchar introduced the End Prediction Market Corruption Act — a new bill to ban the President, Vice President, Members of Congress, and other public officials from trading event contracts. The bill will ensure that federal elected officials maintain their oath of office to serve the people by preventing them from trading on information that they gained through their role.
All this focus on some insiders who made thousands on betting markets to distract from those who made billions on Wall Street or the oil markets this week.
Both should face consequences but only one will.
The prediction market trend will "work itself out".
It will become common knowledge that these platforms are exploited by insiders so people "trust" apparent flagged insider bets, so people will try to piggyback insiders, then it will be revealed that a sophisticated party with infinitely deep pockets burns massive amounts of cash to manipulate odds and these piggybackers will be burned badly, so in the end classical gambling and sports betting will resume as preferred ways for gamblers to lose money because of their disgust with the manipulation.
Prediction markets do seem basically corrupting. So yeah, maybe the winning move for society is to just not regulate them at all so they just become obvious “cheaters only” leagues.
I agree. The market is flawed because there isn’t a guaranteed entropy.
Because of this, the prediction market will remain niche.
Even in the presence of insiders, these markets may still function well as hedges.
this is important from an operational security perspective and hence will probably pass. if they cared about actual insider trading they'd close that gap years ago.
Does this include the stock market?
Related:
War Prediction Markets Are a National-Security Threat https://www.theatlantic.com/technology/2026/03/polymarket-in...
If we can't ban them from trading stocks, good luck with this.
Don't be needlessly cynical.
This is a good effort. So is the ban on stock trading. This administration is such that it is bringing corruption to the fore in a way not seen in generations. Things are always hard to pass at the start. Keep pushing and this administration will create a massive opportunity to swing the pendulum if we can (as hard as it is now) retain some optimism.
To the people downvoting you, you just said the administration is bringing corruption into the public view. Some people believe they are exposing and some believe they are currently doing it. Either way, corruption and profiting off of a political position is certainly top of mind for many Americans atm.
Ah interesting thanks for pointing out the ambiguity in my statement. I definitely did not intend that ambiguity but you also rightly point out it sort of works either way. I would think this would lead to more upvotes than downvotes but perhaps a trend of cynicism also is reflected in assuming the least favorable interpretation.
Thanks for pointing that out.
For the record, I meant the latter. Let the downvotes commence!
Blindly trying things without taking signals from outcomes of the past seems like madness. If you have evidence you have failed at walking many times, should you be putting your energy and efforts into running and jumping instead of continuing to pursue walking?
That's not what I'm doing and I think you know that. Reform takes time. If everyone gave up just because things were difficult n times nothing in government would ever change. The state is not a startup. Behind every significant piece of legislation is a battle.
It's easier to ban things before they become entrenched than after. Banning stock trading is hard today because most senators have been doing it for years before getting elected.
I'd be in favor of senators doing prediction markets, just limited to small dollar trades so they can get better at predicting.
Most criminal activity is hard to change when it's already happening. There is no reason to mollify the problem further.
The answer is simple - you price in the chance that an insider could have an edge on you when making your prediction. It's all part of the game.
Or, and I beg you to consider this radical position: we arrest people who break the law (insider trading is illegal) and those who knowingly help them to do so (the operators of the prediction markets).
How quickly we accept the death of even the ideal of rule of law in favor of embracing a return to an explicit rule by might, fuck-you-got-mine mentality.
It doesn't break the law.
From Wikipedia[0] because I can't be bothered to read more than a few paragraphs:
> In 1909, well before the Securities Exchange Act was passed, the United States Supreme Court ruled that a corporate director who bought that company's stock when he knew the stock's price was about to increase committed fraud by buying but not disclosing his inside information.
Based on anti-fraud common law alone the court decided it was illegal for an insider to trade stocks with non-public information. An explicit law would be nice, but a reasonable interpretation of basic law would see most of our ruling class behind bars. This is only highly-contested and technical because we've let our standards slip so far.
If it doesn’t then it should.
We also care about the world outside the prediction markets. If decision-makers have an incentive to "throw the match" by making surprising decisions, that will impair the decision-making, which will affect the rest of us. Likewise, sufficiently-wealthy actors will be able to manipulate the behaviour of officials by betting against the behaviour they want to see, much like an assassination market.
> manipulate the behaviour of officials by betting against
Right, it becomes regular bribery with middleman and a funny hat.
"I didn't pay the judge to dismiss the case against me, I just hedged by betting I'd be convicted and he just happened to be betting I'd go free, and now my money is coincidentally in his pocket.
Prediction markets and crypto will continue to ride the wave while this administration is in office. But I expect prediction markets will come to be thought of as slimy gambling dens ridden with fraud no different than crypto. The cancerous "greed is good/gamble on everything" attitude prevalent today in America will come crashing down at some point. When? Who knows. The sooner the better.
But for now, make sure you get in your bets er i mean predictions on this mega important market: "Elon Musk # tweets March 3 - March 10, 2026?"[1]
[1] https://polymarket.com/event/elon-musk-of-tweets-march-3-mar...
It wouldn't be a problem if the law was actually applied to prediction markets. If crime is de facto already legal, more laws seems like the least of ones worries.
> you have the perfect recipe to undermine the public’s belief that government officials are working for the public good
The public already does not believe this. Less than 25% approve of your work.
> This legislation strengthens the Commodity Futures Trading Commission’s ability to go after bad actors
And this is designed to "increase trust?"
How is any of this going to get passed without enforcement of anti-trust and an end to citizen united?
What does anti-trust enforcement and citizens united have to do with being able to pass laws on insider trading?
Money in politics which causes politicians to be biased on the passing of legislation?