Discussion
Merkley, Klobuchar Launch New Effort to Ban Federal Elected Officials Profiting from Prediction Markets
themafia: > you have the perfect recipe to undermine the public’s belief that government officials are working for the public goodThe 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 actorsAnd this is designed to "increase trust?"
tokai: 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.
ronsor: If we can't ban them from trading stocks, good luck with this.
pear01: 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.
tlb: 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.
Steinmark: I used to work on the Hill. Here's exactly how Senators will bypass their own prediction market ban.1/ Everyone's cheering the Senate ban on officials benefiting from prediction markets. Cute. I spent 8 years on the Hill. Let me tell you how this actually ends.2/ First, the obvious: spouses. Senator can't trade? Spouse can. "Honey, what do you think about the defense bill?" That's not insider trading. That's breakfast.3/ Second, the blind trust with a wink. "Totally independent manager, I swear!" Who just happens to have lunch with the Senator's chief of staff every Thursday.4/ Third, the "coincidence" factory. Options expire right before a policy announcement. "What are the odds?" The odds were 100% because someone knew.5/ Fourth, the friend network. Senator's golf buddy makes a killing on agricultural futures. Senator votes on farm bill. No direct benefit. Just a very generous "gift" next Christmas.6/ Fifth, the delayed compensation. Trade now, benefit later. Stock vests after leaving office. "I had no idea when I was in office!" Sure.7/ Sixth, the market itself. Senators can't trade? They'll move the market with announcements instead. A well-timed press release is worth 10,000 trades.8/ Seventh, the family foundation. "Charitable work!" That also happens to invest in defense stocks before procurement announcements.9/ Eighth, the speaking fees. "I'm just giving a speech!" For $500,000. To a hedge fund that just made a killing on your policy.10/ Ninth, the book deal. "My memoirs!" Published right after a market-moving vote. Advance calculated based on expected sales = expected notoriety = expected policy impact.11/ Tenth, the revolving door. Leave office, join board, get stock options, exercise them based on policies you passed while in office.12/ Here's the math: There are at least 47 ways to benefit from a prediction market without ever touching a prediction market. The ban covers ONE.13/ This isn't cynicism. It's 8 years of watching smart people find loopholes. You can't outsmart someone whose job is outsmarting.14/ The real solution? Real-time disclosure of ALL financial activity by officials, spouses, staff, and "close associates." Let AI find the patterns. Let the public watch.15/ The defect was never in the individual transactions. It was in the covariance. The relationships. The patterns too subtle for any single ban.16/ They're trying to drop one stitch. The fabric has 47 threads. It will re-knit.17/ Elementary.
ikiris: All of these things were managed by the SEC before it was defanged. You don't need 47 laws, you just have to enforce the basic behavior ones. We don't. Nothing else will fix this.
romaaeterna: > 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
staplung: 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.
treetalker: Don't forget relatives, useful idiots, and billionaire special envoys!
lukev: 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."
schnebbau: 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.
idle_zealot: 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.
wizzwizz4: 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.
jpmoral: Aren't there already basic laws against officials profiting from their role?
trinsic2: How is any of this going to get passed without enforcement of anti-trust and an end to citizen united?
gruez: What does anti-trust enforcement and citizens united have to do with being able to pass laws on insider trading?
matthewfcarlson: 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.
SteveNuts: Seems like you’d get a secondary proxy market popping up overnight. Like domain privacy for degenerates.
gruez: That's why you make the regulations like AML regulations, where it's a crime to obfuscate the source of the wager too.
soared: 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.https://polymarket.com/profile/%40Magamyman
andai: 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.)
nomilk: 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.
ChrisArchitect: Related:War Prediction Markets Are a National-Security Threat https://www.theatlantic.com/technology/2026/03/polymarket-in...(https://news.ycombinator.com/item?id=47291036)
int32_64: 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.
mvkel: Accurate info on what? Most markets have almost no liquidity, outside of sports and crypto
9dev: The latter two groups often overlap, even
End Prediction Market Corruption Act
stopbulying: > 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.
