Senate Moves To Curb Prediction Market Trades Amid Reported Candidate Penalties

TLDR

Table of Contents

The Senate ban covers members and staff trading on prediction markets.
The rule takes effect immediately after a unanimous Senate vote.
Kalshi and Polymarket have seen sharp growth in trading volume.
Kalshi said it fined candidates tied to trades on their own races.
Lawmakers urged the CFTC to restrict some event contracts.

The US Senate has banned senators and staff from trading on prediction markets. The move comes as insider trading concerns grow around political event contracts.

The rule targets platforms such as Kalshi and Polymarket. It also adds fresh pressure on a sector that has grown fast in crypto-linked markets.

Senate acts as prediction markets expand

The Senate passed the rule unanimously on Thursday. It bars members and staff from using prediction markets for personal trades.

The ban takes effect immediately. It covers event contracts linked to politics, war, sports, and government decisions.

Lawmakers raised concerns about access to private information. They said officials may know facts before the public does.

Senators voted unanimously to ban themselves from participating in prediction markets as Congress tackles the ethics of the novel platforms.
The ban does not apply to the House or the federal bureaucracy. https://t.co/PWnIfbmtaZ
— The Washington Post (@washingtonpost) April 30, 2026

The rule comes as Kalshi and Polymarket report strong market activity. Both platforms have drawn users who trade on real-world events.

Kalshi and Polymarket face closer review

Kalshi was valued at $22 billion in a recent funding round. Polymarket has reportedly discussed raising $400 million at a $15 billion valuation.

Trading activity has also grown fast. Reuters estimated Kalshi may handle $96 billion in 2026 trading volume.

Reuters also estimated Polymarket may handle $84 billion in 2026 volume. These figures show the market has moved beyond a small betting niche.

However, rapid growth has brought more review from lawmakers. The Senate rule shows that political trading now faces tighter limits.

Enforcement cases add pressure

The vote followed several recent enforcement cases. On April 22, Kalshi said it “suspended and fined” one Senate candidate.

Kalshi also said it fined two House candidates. The cases involved trading tied to their own races.

A day later, Army Master Sgt. Gannon Ken Van Dyke was arrested. Prosecutors accused him of using classified information for Polymarket wagers.

AP reported that classified information concerns helped drive the Senate ban. The case added pressure for clearer rules.

Democratic lawmakers also urged the CFTC to restrict some event contracts. They cited elections, war, military action, sports, and government decisions.

They said such contracts should be allowed only for valid economic hedging. That request may shape future rules for prediction markets.