Prediction markets are facing increased scrutiny in Washington after users on Polymarket, the world's largest such platform, placed bets on when a US airman shot down by Iran would be rescued. Representative Seth Moulton described the activity as a 'dystopian death market' and accused the site of war profiteering. Polymarket halted the betting, citing integrity concerns.
The controversy has prompted rare bipartisan agreement in Congress, with lawmakers from both parties pressing regulators on the risks of insider trading. The Commodity Futures Trading Commission oversees prediction markets in the US, but Polymarket operates largely offshore, beyond its reach. Concerns range from undermining sports integrity to fuelling online betting addiction among young men.
Bills have been introduced to bar federal employees from using non-public information to bet on these markets. Potential presidential candidates have also weighed in, with Rahm Emanuel proposing a ban and a 10% fee to fund research, and California Governor Gavin Newsom issuing an executive order targeting appointees. However, no legislation is expected to pass imminently.
Polymarket has faced particular criticism over well-timed bets, including a $400,000 win predicting the ousting of Venezuela's president, raising fears of insider trading. Donald Trump Jr., a paid adviser to Polymarket's rival Kalshi, sits on its advisory board. The White House has warned staff against using private information for such trades.
