U.S. Senators Vote to Ban Themselves from Trading on Prediction Markets
Comments
ribosometronome
CGMthrowaway
This is rules of the Senate, not law, so everything is up to interpretation by the Ethics Committee. And we know how that goes
alex43578
Not a lawyer, but that sounds like the language regulating swaps.
knollimar
What about options and futures?
blazespin
No, because that's real money.
jrmg
Or buying health insurance?
Edit: I guess that’s not dependent on a ‘specific’ future event.
bitshiftfaced
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.
SoftTalker
If they are smart they will stay ahead of government regulation by voluntarily restricting certain types of trading.
Snowfield9571
What about their family? What about staffers? What about anyone in the room when insider information is being shared? Good first step but plenty of ways around this. Not really that significant.
Do stock trading next.
warbaker
The real with prediction markets problem is that people can make bets, then alter outcomes to match those bets. This is a well-known issue in sports betting (e.g. taking a fall), and I don't see how we're going to prevent it for things that matter a whole lot more than sports.
ericzundel
Also, a bet in these markets can be used to alter outcomes. That problem is caused by journalists reporting on market activity. It is treated (or percieved by readers) as if it reflects popular sentiment. Not only is it possible, it's actually relatively cheap to do things like corner the market, which in some cases is a lot less expensive than, say, a national TV ad campaign or running a scientific poll. Link to an older article: https://insights.som.yale.edu/insights/dont-trust-the-politi...
perfectstorm
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.
HDBaseT
How do you police "major influence"?
We've seen OpenAI employees get caught insider trading on prediction markets for new model releases.
Every human is privy to some sort of exclusive information. Polymarket and the likes offer predictions on just about everything that has any relevancy. Sports, Technology, eSports, Politics.
You don't have to have "major influence" to be a beneficiary of insider trading.
jadbox
Note that this is just a code of conduct change for the ethics committee, not a law. Something is better than nothing.
blazespin
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.
danesparza
ANY government employee or government contract worker should be banned from trading on prediction markets.
verst
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...
vjvjvjvjghv
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.
verst
I was a GS-15 before (same level most CTOs in government have). Maybe senior executive service roles (SES) might not concern themselves with ethics violations.
In any case the vast majority of government employees are on the general schedule.
sarchertech
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.
tt24
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.
sarchertech
Yeah that’s why I said prediction markets, not stock markets. In a prediction market you’re betting directly on something like “AWS has a major outrage on or before May 12th”.
tt24
Oh you're right I misread your comment
giarc
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.
bombcar
Arguably they should ban all US residents, citizens, and immigrants from prediction markets.
Avicebron
Or just ban the companies? Opaque drath pools and gambling markets don't have a right to exist.
bombcar
That was the joke ;)
ohnei
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.
throwway120385
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?
ohnei
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? But why not pick equivalent strong points. If you are planning purchase like a next auto might you find future energy market related bets helpful to estimating long term risks for your choice?)
*typo
radley
> A cafeteria worker in some suburban admin office likely has no inside information they are going to trade on.
Until they do...
jlarocco
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.
xrd
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!
yalogin
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
williamtrask
i'm not sure it's productive to think this way. senators could be making more money on prediction markets. they took a nice step which will lead them to make no money on prediction markets (less money overall). it also sets a precedent which could easily be applied to the stock market.
what you're saying is probably on the mind of at least one Senator, but all things considered, this feels like a net-positive move which they didn't have to do.
nemomarx
I get what you're saying but they did also vote themselves a restriction on stock trading in 2012, so the same behavior as this? If prediction markets get really profitable you might expect the same loophole there too.
cowpig
better is always good
when something you think is bad gets better but not better enough, say "more please"
yalogin
Nice! I like it
williamtrask
i like your comment better than mine. more please.
ASalazarMX
"Prediction market" sounds much better than online gambling.
choward
It's not gambling if you have information that most of the world doesn't have.
arjie
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.
fhn
What about friends, family, neighbors, and benefactors? Prediction markets should be illegal period.
cortesoft
There is a valid purpose for (some) trades in a prediction market, namely as a form of insurance/risk management for specific risks a company or individual might have.
For example, if you are a company whose current business would be severely hurt if a particular piece of legislation passes, it might make sense to hedge that risk by placing a bet on a prediction market that the legislation will pass. That way, if your business is hurt by the legislation, you can use the proceeds to offset the harm and pivot to something else.
Of course, that doesn’t explain most prediction market contracts, but that is the idea at least.
worik
And another thing... What is the harm of malfunctioning insider dominated prediction markets, other than those hedging possibilities evaporating?
I am not taking a position, I am wondering.
When they started they were an academic curiosity and experiment. Now they are becoming a social phenomenon are they more harmful than, say, stamp collecting?
"Fools and their money" is OK so long as the fools are truly volunteering, surely?
vkou
They create another financial incentive for insiders to make decisions focused solely on personal profit, rather than good stewardship of whatever they are in charge of.
I don't give a shit about the addicts losing their money on those markets, I don't want bad decisions to be made that affect me, when the main incentive for making them is fleecing the addicts of their money.
They are just bribery with extra steps.
jrmg
Kalshi and its peers are legal because they’re commodity futures trading, not gambling.¹
Are senators not allow to buy any commodities futures now (it reads like it)?
¹I, and I think most reasonable people, think this is ridiculous - it’s obviously gambling in a trenchcoat, but that’s what they claim…
antasvara
To be fair to traditional futures, they don't technically depend on the occurrence or non-occurrence of a specific event. They're an agreement to buy X asset at Y price on Z future date. You may lose money by being forced to buy oil at an above-market rate, but your contract doesn't say anything about the market rate at date Z (as far as I'm aware).
Whereas prediction markets (and some other stock market/commodity option contracts) are explicitly tied to an event. They're saying "I'll give you $1 if this clearly defined event occurs."
PeterStuer
Also their spouses? :D
the13
Just prediction markets? They should be banned from all trading and active investing, period.
roncesvalles
But then how will they make money? They only make a $174k base salary and a 15% cap on how much they can earn from other employment sources. I'm only saying this semi sarcastically. Often the senator's aides earn more than the senators themselves.
cortesoft
Just disallow any personal investment choices. Either they have to invest in an index fund, a mutual fund, or have a manager who makes independent investment decisions.
They could even do the sort of things corporate execs at publicly traded companies do, and fill out forms well in advance about future investment purchases, to avoid the ability to time purchases to inside information.
andrewflnr
> Often the senator's aides earn more than the senators themselves.
Fine. People motivated by money should take jobs other than sitting in Congress.
6AA4FD
Many if not most intelligent and skilled people are highly motivated by money, not just in pursuit of material comfort but security for their spouse, offspring, and extended family.
I am skeptical of an arrangement where those incentives are at odds with care for critical infrastructure like our political process.
That being said, the current arrangement makes it vastly more profitable to destabilize the economy and sell short than stabilize it and buy long, which is clearly unacceptable to me.
420official
Not paying officials enough leads to bribery and corruption. Take away their avenue for insider trading, but let them make a healthy living off it in my opinion.
andrewflnr
Do you not think 174k is "enough"?
ToValueFunfetti
~Everybody is motivated by money or else not motivated at all. Money is potential energy for essentially any objective you might have, whether that's developing new tech or donating to charity. By cutting money out, you just select for the subset of people who are more motivated by power or status or who already have more money than they know what to do with.
andrewflnr
It should be obvious that there's a balance between wanting enough money to live comfortably and wanting as much money as possible. Government jobs should be good enough for the former.
direwolf20
Senators should be paid three times the lower quartile wage.
cbdevidal
Agreed. One thing I appreciate about New Hampshire’s state congress is their pay is fixed at $100/year.
tstrimple
Great way to ensure only the independently wealthy can participate in politics.
cbdevidal
Or they have side gigs. Many of the founders of our nation had side gigs[1].
New Hampshire is number one freest state[2], 20th place for GDP per capita[3], 8th happiest state in the nation[4], and second-safest state in the nation[5]. They must be doing something right.
[1] https://theturnaroundauthority.com/2014/07/02/professions-of...
[2] https://www.freedominthe50states.org/overall/new-hampshire
[3] https://en.wikipedia.org/wiki/List_of_U.S._states_and_territ...
[4] https://wallethub.com/edu/happiest-states/6959
[5] https://www.usnews.com/news/best-states/rankings/crime-and-c...
mothballed
I don't think people that are electable are usually the kind of people that should be in congress. If you have the kind of personality and allegiances to be representing the common man, you can't get elected due to how that process works.
Sortition makes way more sense to me for something like a congress. You just end up with a random selection of the population.
redorb
The fact senators have been able to stay in the senate for 20+ years, means they are probably making plenty of money. We need another round of FBI bribe stings to clean things up
foxyv
It would be nice if government officials had to do a national index fund (Vanguard or similar) stock purchase plan along the lines of employee stock purchasing in private companies.
TimTheTinker
The 15% cap likely only applies to IRS-reportable gains on the congressperson's personal tax return. That unfortunately doesn't preclude insider trading by spouses, within IRA accounts, or within wholly or partially owned c-corporations controlled by the congressperson or a close family member.
We need a federal law that says: "the definition of material non-public information (MNPI) is extended to mean any non-public information those in federal, state, or local government are privy to that may affect securities prices, and individuals in or adjacent to government are equally subject to prosecution for trading on it".
noworld
Ban the trading and upping the base pay would probably improve accessibility.
Ekaros
Well they could always set policies where 174k is a good living salary...
bs7280
People should not be getting into politics for the money. I want senators who are doing it because they want to see a change in the world.
pojzon
They want to see a change! In theirs account balance. Its still part of the world. Their world.
2ndorderthought
If you can't make it on 175k you might need to go to rehab.
stvltvs
Blind trusts.
brendoelfrendo
Yeah, I kind of agree with your semi-sarcastic take. While that salary is well above the US average, the fact is that they almost certainly don't make enough to own or rent a home in DC, and a second home in their constituency. It all but ensures that there can't be an honest member of congress, unless they feel like sleeping in their office.
ocdtrekkie
What can Congresscritters expense? I'd assume they need to travel between their home state and DC frequently. Would lodging for work where they do not have a home be expensable somewhere?
Isn't the solution to needing two homes to do the job for the government to provide that as a work expense rather than permitting funky financial hijinks?
tstrimple
It’s better than it used to be. Since 2023 House members can expense up to $30k / year in travel costs and lodging in DC. Prior to that, they had to eat those costs which were estimated to average around $28k per year based on number of days in session.
IAmBroom
Poor unfortunate souls.
qwertyuiop_
What’s the ceiling ?
https://www.quiverquant.com/congresstrading/politician/Nancy...
caymanjim
There's momentum on this, including from within Congress. I think it's likely in the future. I don't see it happening before at least two more Congressional elections.
adverbly
Exactly!
If we're gonna give this actual attention, we should be focusing on the fact that they should be banned from any form of insider trading or major conflict of interest!
strulovich
They are blocked from insider trading
I think this in the previous comment undervalue just how many more complicated ways there are for corruption to bubble.
Assume super strict rules. Consider this example to circumvent them: Senator-elect A makes an LLC and invest their money (with some friends) in it (before taking office)
They can’t even talk to the money manager. But the manager can see their actions, and the senator can know their ow investments and work in their favor.
nyc_data_geek1
UnusualWhales begs to differ
maxbond
Not to say they shouldn't be prohibited from trading in more markets or all markets, but prediction markets are so narrow in scope there could be a market on the way a particular senator votes on a particular bill. There will definitely be prediction markets made on the outcome of major proceedings the senator would be voting in, such as confirmations, on multiple platforms.
aanet
+1000
delichon
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.
lapetitejort
Would Martha Stewart be sentenced to prison for lying to federal investigators regarding her "prediction" of the release timing of her next cookbook?
JuniperMesos
Maybe, lots of things count as lying to federal investigators. I don't assume this is necessarily a just legal outcome though.
vkou
That's a good start, and should be followed by banning everyone else from trading on them.
idle_zealot
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.
jocaal
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?
armada651
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.
bulbar
Because it isn't limited to seemingly innocent sports matches.
micah_chatt
What about Senate staff?
caymanjim
The article specifically mentions staff, even in the short snippet before the paywall.
the rules apply to senators, officers and staff
swingboy
How can you even trace it if they’re using crypto?
josephscott
Good - now do a ban on individual stock trading.
nickpsecurity
Don't many already do something similar by insider trading on the stock market?
Maybe they didn't need more uncertainty in their portfolios.
nickvec
Prediction markets need to be banned entirely. It’s asinine that Kalshi and Polymarket are even a thing.
rvz
Good. Now they should also ban themselves from insider trading in both the public stock market and private markets as well as prediction markets.
tt24
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
lapetitejort
> 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
IAmBroom
Nor even the House of Representatives.
handedness
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
java-man
But it's so... profitable!
robomartin
Almost there...
Both for Senators and Representatives:
- Term limits (2 consecutive terms max) - No stock market participation in any form during office - No corporate or PAC contributions - Prison for lying to the public or during the course of their work (hearings, media, etc.) - Serious legal consequences for defamation or libel - No special medical/healthcare insurance, accounts or treatment - Pensions only bases on their own contributions, nothing else - No lifetime pensions or healthcare - This one is tough: Consequences for campaign promises not met (part of no lies) - Consequences for shutting down government - Serious consequences for not balancing the budget or driving meaningful reductions that will result in a balanced budget in short order - No media-related jobs for five years after leaving office - No book deals for five years after leaving office - No movie deals for five years after leaving office - No fancy office anything that costs more than your average Ikea/Walmart office furniture - Severe consequences for illicit enrichment; a bartender cannot come out of Congress a multi-millionaire, period.
In other words, like any real job by average citizens. They should not be a privileged and protected class.
IAmBroom
Very few if any of these are applicable to "any real job by average citizens".
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?