So they can vote themselves out to do the right thing, and they purposefully allowing themselves to invest in the stock market with insider information. My cynicism tells me they are throwing this bone to divert attention from the stock market loophole
Prediction markets have realized that they will lose potential customers if they don't prevent insider trading. Kalshi already has a policy banning politicians from trading. Presumably they understand this, so while I'm glad to see the rule, I wouldn't say it's that self-sacrificing.
Any lawyers able to comment on the actual wording of the resolution? It kind of reads to me like in their effort to narrowly capture just prediction markets like Kalshi but not stock markets, they've perhaps unintentionally barred themselves from some other unintended things, too.
>No Member of the Senate may enter into, or
offer to enter into, an agreement, contract, or transaction
that provides for any purchase, sale, payment, or delivery
that is dependent on the occurrence, nonoccurrence, or the
extent of the occurrence of a specific event.
Kind of seems like Senators would now be barred from like getting home or life insurance and certain kinds of casino gambling. Or like, making an offer on a home that is rescindable upon a failed inspection?
We've learned that these tools are only as effective as the tools of enforcement. A valid technique now available to us is to ban some activity that has valuable returns, then participate in it nonetheless, and simply not enforce action except against those of an opposing tribe. Presumably, violations of this ban simply lead to a hearing before an ethics committee staffed to lean towards the appropriate direction?
Still, it is something. Some chilling effect is better than none. While we do this, it is worthwhile to make prediction markets accessible to our opponents. Ideally, those in corrupt countries aligned against us should be leaking as much information through the markets to us and we should enrich them for it. I'd love to have this kind of distributed espionage with the largest number of bets being on the actions of those aligned against us.
I just can't understand how this prevents, say, the son
-in-law of the president (totally unelected) going to negotiate for peace in Iran, while his brother in law is on the board of Polymarket and a strategic advisor to Kalshi.
This is going to ruin interesting conversations at their holiday dinners!
good. and the restriction shouldn’t stop at U.S. Senators. anyone with a major influence in their field should be banned from using these prediction/betting apps. as an NBA fan, I was shocked when I saw the reports about Milwaukee star Giannis allegedly using Kalshi to “predict” his own future team during the last NBA trade deadline. how is that even allowed? he even went on to promote the prediction app the day after the trade deadline.
Pure gaslighting. The PM panic is because people want to look like they 'care' about corrupt trading. It's peanuts compared to the 500M they were betting on oil futures.
In theory as a government employee you already fear getting in trouble with OGE (Office of Government Ethics) and in normal times this is truly enough. Nobody wants to have a conflict of interest or fail to disclose investments etc. However nothing is normal under the current administration...
Every large company should ban employees and contractors from trading on prediction markets. There are so many ways an employee could make money on prediction markets. Causing outages is probably the easiest, but anything that would get the company in the news would do it.
The US federal workforce is ~2.2 million people. Banning them all from trading on prediction markets isn't the right move. A cafeteria worker in some suburban admin office likely has no inside information they are going to trade on. Members of congress and other high level positions on the other hand should be banned.
Why stop at prediction markets? Trading in markets is heavily tied to information or information processing advantage so probably all assets should be held by the government to avoid conflicts of interest involving self interests.
Reducto ad absurdum doesn't work here. You have to show that there's a desire and a rationale for going from limiting betting markets like Kalshi and limiting "investment" markets, which you haven't done. What you have left is a salty quip.
There's an obvious opportunity to use insider information or insider influence to create a particular outcome on Kalshi. Like I could trade on the likelihood of a power outage in my city tomorrow or the next day and then in order to make good on the "trade" I could just drive a vehicle into the substation. Or I could do something more insidious. But the fact that my incentives are aligned by Kalshi with me blowing up a power substation means that Kalshi is a net negative even though individuals could make money from it.
There's a difference between betting on the outcome of an event and investing in a company, although companies like Kalshi and Polymarket like to try to erase that difference. Investments are all notionally conditioned on a company meeting performance goals, and that incentive is aligned with the desire of company employees to also meet performance goals. Companies also generally align around some kind of useful output like washing machines or clothing which are beneficial in some way. What is useful about betting on the color of the sky at sunset in Lisbon on September 28th?
You are apparently very happy with a market that is defined by an economist who views it as you view the prediction* market.
Prediction markets are useful in their own right because they help people plan with information independent of themselves and more accurate and less biased than other sources. That is very similar to a market allocating a societies future allocations through rewarding holding of past investments. Both actually have many of the same problems and elimination of either can not prevent insider trading on information or significant resources being wasted on zero sum game aspects or faults in how such simple systems of reward function layers allocate as well.
If you plan to propose to a partner in September might it not be helpful to have an opinion about the night of the 28th? Is that more or less important than the OTC penny stock for a probably defunct mine that possibly has copper?
I don't agree. When the senators walk into the cafeteria talking about the bill they're about to pass, the cafeteria worker can easily overhear their insider information.
Avoiding insider trading on prediction markets seems like an intractable problem to me.
All of the other markets are prediction markets too, in terms of opportunities to profit from inside knowledge. This is like vowing to quit smoking ... Marlboros.
I agree in spirit, but really it should be the other way around, no? People aren't banned from using them, companies are banned from offering them. I do not want to see a future in which people get their doors knocked down because they're under suspicion of using a gambling app.
Why though. This is a dead serious question, what is the difference in using financial derivatives and prediction markets. Both are a transaction between parties that is influenced by some other underlying event. Why is it ok for the event to be a stock price, but not ok for it to be a sports match?
The financial derivatives are (supposed to be) regulated, there's laws against insider trading that keep the market fair. For sports betting there's laws against match fixing.
The prediction market CEOs on the other hand seem to be actively encouraging insider trading and match fixing, it's practically their main selling point.
Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 prohibits insider trading. Since a lot of politicians can affect companies, they found themselves facing this conundrum - should they profit off insider knowledge ("We are going to go after Meta in 2 weeks") or not. To help politicians not get mired in such conundrums, the STOCK Act (Stop Trading on Congressional Knowledge Act) in 2012 was passed following a 60 Minutes exposé.
It clarified that these people in power owed a duty to the U.S. Government and the American people, making it illegal for them to use non-public information derived from their positions for personal profit.
Unfortunately, certain Representatives, like a few from California missed that memo - for decades - and in certain cases, had their spouses trade on their behalf for added plausible deniability in the unlikely case they were taken to court.
These certain Representatives from California have performance in the stock market that has repeatedly beat, by large margins, full time investors like Warren Buffett.
Not respecting the STOCK Act and filing disclosures late (which defeats its whole purpose) carries a massive, life ruining fine of $200.
This specific proposal attempts to clarify whether "use of non-public information derived from their positions for personal profit" applies only to the stock market or to anything that can make them money, like gambling sites.
Our politicians seem to really struggle understanding the intent of laws even if it's explicitly spelled out for them.
They should do this, but only because senators and congresspeople are terrible at trading stocks and they generally average below SPY.
There’s like 2 famous exceptions, other than those they are simply abysmal traders because their information isn’t worth very much. This problem is so overstated, it’s popular because it’s vaguely populist and exhibits an anti elite sentiment
> A member, officer, or employee of the __Senate__ shall not receive any compensation, nor shall he permit any compensation to accrue to his beneficial interest from any source, the receipt or accrual of which would occur by virtue of influence improperly exerted from his position as a member, officer, or employee.
Emphasis mine. This does not cover the judicial or executive branch
The STOCK Act mostly only had the effect of creating some inconveniences for lawmakers (e.g., their families could still trade based on their guidance), and even that was only the case for a year as Senator Reid's House bill S.716 effectively gutted the STOCK Act and restored the status quo, was passed by unanimous consent after 14 seconds of discussion, and was signed into law by President Obama:
https://en.wikipedia.org/wiki/STOCK_Act#Amendment
So they can vote themselves out to do the right thing, and they purposefully allowing themselves to invest in the stock market with insider information. My cynicism tells me they are throwing this bone to divert attention from the stock market loophole
Prediction markets have realized that they will lose potential customers if they don't prevent insider trading. Kalshi already has a policy banning politicians from trading. Presumably they understand this, so while I'm glad to see the rule, I wouldn't say it's that self-sacrificing.
Any lawyers able to comment on the actual wording of the resolution? It kind of reads to me like in their effort to narrowly capture just prediction markets like Kalshi but not stock markets, they've perhaps unintentionally barred themselves from some other unintended things, too.
https://www.moreno.senate.gov/wp-content/uploads/2026/04/FIL...
>No Member of the Senate may enter into, or offer to enter into, an agreement, contract, or transaction that provides for any purchase, sale, payment, or delivery that is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of a specific event.
Kind of seems like Senators would now be barred from like getting home or life insurance and certain kinds of casino gambling. Or like, making an offer on a home that is rescindable upon a failed inspection?
This is rules of the Senate, not law, so everything is up to interpretation by the Ethics Committee. And we know how that goes
What about options and futures?
No, because that's real money.
Not a lawyer, but that sounds like the language regulating swaps.
We've learned that these tools are only as effective as the tools of enforcement. A valid technique now available to us is to ban some activity that has valuable returns, then participate in it nonetheless, and simply not enforce action except against those of an opposing tribe. Presumably, violations of this ban simply lead to a hearing before an ethics committee staffed to lean towards the appropriate direction?
Still, it is something. Some chilling effect is better than none. While we do this, it is worthwhile to make prediction markets accessible to our opponents. Ideally, those in corrupt countries aligned against us should be leaking as much information through the markets to us and we should enrich them for it. I'd love to have this kind of distributed espionage with the largest number of bets being on the actions of those aligned against us.
I just can't understand how this prevents, say, the son -in-law of the president (totally unelected) going to negotiate for peace in Iran, while his brother in law is on the board of Polymarket and a strategic advisor to Kalshi.
This is going to ruin interesting conversations at their holiday dinners!
good. and the restriction shouldn’t stop at U.S. Senators. anyone with a major influence in their field should be banned from using these prediction/betting apps. as an NBA fan, I was shocked when I saw the reports about Milwaukee star Giannis allegedly using Kalshi to “predict” his own future team during the last NBA trade deadline. how is that even allowed? he even went on to promote the prediction app the day after the trade deadline.
Note that this is just a code of conduct change for the ethics committee, not a law. Something is better than nothing.
Pure gaslighting. The PM panic is because people want to look like they 'care' about corrupt trading. It's peanuts compared to the 500M they were betting on oil futures.
ANY government employee or government contract worker should be banned from trading on prediction markets.
In theory as a government employee you already fear getting in trouble with OGE (Office of Government Ethics) and in normal times this is truly enough. Nobody wants to have a conflict of interest or fail to disclose investments etc. However nothing is normal under the current administration...
Ethics rules only apply to the lower ranks and as far I know, they are quite strict. Once you move up the chain, most rules become optional.
Every large company should ban employees and contractors from trading on prediction markets. There are so many ways an employee could make money on prediction markets. Causing outages is probably the easiest, but anything that would get the company in the news would do it.
I find this argument entirely unconvincing.
AWS’s massive outage lead to a significant jump in the stock price.
No single grunt level employee has the power to affect any large company’s share price.
The US federal workforce is ~2.2 million people. Banning them all from trading on prediction markets isn't the right move. A cafeteria worker in some suburban admin office likely has no inside information they are going to trade on. Members of congress and other high level positions on the other hand should be banned.
Arguably they should ban all US residents, citizens, and immigrants from prediction markets.
Or just ban the companies? Opaque drath pools and gambling markets don't have a right to exist.
That was the joke ;)
Why stop at prediction markets? Trading in markets is heavily tied to information or information processing advantage so probably all assets should be held by the government to avoid conflicts of interest involving self interests.
Reducto ad absurdum doesn't work here. You have to show that there's a desire and a rationale for going from limiting betting markets like Kalshi and limiting "investment" markets, which you haven't done. What you have left is a salty quip.
There's an obvious opportunity to use insider information or insider influence to create a particular outcome on Kalshi. Like I could trade on the likelihood of a power outage in my city tomorrow or the next day and then in order to make good on the "trade" I could just drive a vehicle into the substation. Or I could do something more insidious. But the fact that my incentives are aligned by Kalshi with me blowing up a power substation means that Kalshi is a net negative even though individuals could make money from it.
There's a difference between betting on the outcome of an event and investing in a company, although companies like Kalshi and Polymarket like to try to erase that difference. Investments are all notionally conditioned on a company meeting performance goals, and that incentive is aligned with the desire of company employees to also meet performance goals. Companies also generally align around some kind of useful output like washing machines or clothing which are beneficial in some way. What is useful about betting on the color of the sky at sunset in Lisbon on September 28th?
You are apparently very happy with a market that is defined by an economist who views it as you view the prediction* market.
Prediction markets are useful in their own right because they help people plan with information independent of themselves and more accurate and less biased than other sources. That is very similar to a market allocating a societies future allocations through rewarding holding of past investments. Both actually have many of the same problems and elimination of either can not prevent insider trading on information or significant resources being wasted on zero sum game aspects or faults in how such simple systems of reward function layers allocate as well.
If you plan to propose to a partner in September might it not be helpful to have an opinion about the night of the 28th? Is that more or less important than the OTC penny stock for a probably defunct mine that possibly has copper?
*typo
> A cafeteria worker in some suburban admin office likely has no inside information they are going to trade on.
Until they do...
I don't agree. When the senators walk into the cafeteria talking about the bill they're about to pass, the cafeteria worker can easily overhear their insider information.
Avoiding insider trading on prediction markets seems like an intractable problem to me.
"Prediction market" sounds much better than online gambling.
All of the other markets are prediction markets too, in terms of opportunities to profit from inside knowledge. This is like vowing to quit smoking ... Marlboros.
Would Martha Stewart be sentenced to prison for lying to federal investigators regarding her "prediction" of the release timing of her next cookbook?
Maybe, lots of things count as lying to federal investigators. I don't assume this is necessarily a just legal outcome though.
Don't many already do something similar by insider trading on the stock market?
Maybe they didn't need more uncertainty in their portfolios.
That's a good start, and should be followed by banning everyone else from trading on them.
I agree in spirit, but really it should be the other way around, no? People aren't banned from using them, companies are banned from offering them. I do not want to see a future in which people get their doors knocked down because they're under suspicion of using a gambling app.
Why though. This is a dead serious question, what is the difference in using financial derivatives and prediction markets. Both are a transaction between parties that is influenced by some other underlying event. Why is it ok for the event to be a stock price, but not ok for it to be a sports match?
The financial derivatives are (supposed to be) regulated, there's laws against insider trading that keep the market fair. For sports betting there's laws against match fixing.
The prediction market CEOs on the other hand seem to be actively encouraging insider trading and match fixing, it's practically their main selling point.
Because it isn't limited to seemingly innocent sports matches.
Good - now do a ban on individual stock trading.
Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 prohibits insider trading. Since a lot of politicians can affect companies, they found themselves facing this conundrum - should they profit off insider knowledge ("We are going to go after Meta in 2 weeks") or not. To help politicians not get mired in such conundrums, the STOCK Act (Stop Trading on Congressional Knowledge Act) in 2012 was passed following a 60 Minutes exposé.
It clarified that these people in power owed a duty to the U.S. Government and the American people, making it illegal for them to use non-public information derived from their positions for personal profit.
Unfortunately, certain Representatives, like a few from California missed that memo - for decades - and in certain cases, had their spouses trade on their behalf for added plausible deniability in the unlikely case they were taken to court.
These certain Representatives from California have performance in the stock market that has repeatedly beat, by large margins, full time investors like Warren Buffett.
Not respecting the STOCK Act and filing disclosures late (which defeats its whole purpose) carries a massive, life ruining fine of $200.
This specific proposal attempts to clarify whether "use of non-public information derived from their positions for personal profit" applies only to the stock market or to anything that can make them money, like gambling sites.
Our politicians seem to really struggle understanding the intent of laws even if it's explicitly spelled out for them.
Good. Now they should also ban themselves from insider trading in both the public stock market and private markets as well as prediction markets.
They should do this, but only because senators and congresspeople are terrible at trading stocks and they generally average below SPY.
There’s like 2 famous exceptions, other than those they are simply abysmal traders because their information isn’t worth very much. This problem is so overstated, it’s popular because it’s vaguely populist and exhibits an anti elite sentiment
This was done in 2012: https://en.wikipedia.org/wiki/STOCK_Act
> A member, officer, or employee of the __Senate__ shall not receive any compensation, nor shall he permit any compensation to accrue to his beneficial interest from any source, the receipt or accrual of which would occur by virtue of influence improperly exerted from his position as a member, officer, or employee.
Emphasis mine. This does not cover the judicial or executive branch
The STOCK Act mostly only had the effect of creating some inconveniences for lawmakers (e.g., their families could still trade based on their guidance), and even that was only the case for a year as Senator Reid's House bill S.716 effectively gutted the STOCK Act and restored the status quo, was passed by unanimous consent after 14 seconds of discussion, and was signed into law by President Obama: https://en.wikipedia.org/wiki/STOCK_Act#Amendment
https://www.congress.gov/bill/113th-congress/senate-bill/716
But it's so... profitable!