Political candidates are betting on their elections. The soldiers allegedly benefited from the military operations in which they were participating. Congress feels pressure to do something.
WASHINGTON – A spate of scandals at popular online gambling platforms is prompting calls for intervention in Congress.
The April 30th Senate rule changes were unanimously voted on in the wake of a series of controversies that erupted in April, from political candidates cashing in on their campaigns to allegations of soldiers betting on large-scale military operations. The senator and his staff were banned from trading in prediction markets, which allow people to buy and sell bets online about future events.
Sen. John Curtis (R-Utah) asserted that this is just the beginning of a new wave of federal oversight. The next legislative challenge, he said, would be to ban all government officials from using insider information to bet on prediction market contracts.
“It should be everyone,” Sen. James Lankford (R-Okla.) told USA TODAY. “We start with the members (of Congress).”
In recent months, a flurry of new legislation has been introduced to rein in the platforms. Rep. French Hill, the Republican chairman of the Arkansas House Financial Services Committee, told USA TODAY that the House is considering a ban on members similar to the one passed by the Senate. He hopes the executive branch will also review the rules.
However, there is a complex legal and political landscape ahead for members of Congress who have their sights set on online gambling. First, state and tribal governments are in an ongoing battle with federal agencies over who has primary authority to regulate these organizations. Congress has recently been hampered by infighting within the Republican Party, and has struggled to carry out even the basics of enacting legislation. And President Donald Trump’s complicated relationship with the industry won’t make progress on regulatory efforts any easier.
Despite these challenges, Sen. Richard Blumenthal (D-Conn.) said there is “a good chance” Congress will become more involved in the issue.
“Prediction markets are calling for some legislative intervention,” he told USA TODAY.
Spokespeople for two of the largest prediction markets, Calci and Polymarket, referred USA TODAY to online statements supporting lawmakers’ ban on insider trading on their platforms, but said insider trading is already prohibited.
Bad month for prediction markets
April was a bad month for online betting.
In the first week, Polymarket was forced to publicly apologize for allowing users to bet on the fate of two pilots after a jet crashed in Iran. Rep. Seth Moulton (D-Mass.), who first drew attention to the incident on social media, called the incident “disgusting.” (Polymarket technically prohibits Americans from using its main platform, but many users have found creative ways to appear to be outside the United States online, creating a big problem for federal regulators.)
And on April 22, Kalsi fined and suspended three political candidates from his platform for attempting to gain financial advantage from his primary campaign. One candidate, Mark Moran of Virginia, said he gambled on jumping into the Senate race because he wanted to capture and expose how “corrupt” Mr. Carsi is.
The next day, the Justice Department charged an army soldier with illegally profiting from the arrest of former Venezuelan President Nicolas Maduro. This soldier, Gannon Ken Van Dyke, participated in the plan to arrest Maduro. He is said to have made more than $400,000 betting on the timing of the surgery. He has pleaded not guilty to insider trading charges.
Blumenthal, a Marine Corps veteran, said the incident was a “clear threat to national security.”
Fighting regulations
One of the biggest barriers to further regulating prediction markets is the conflict over who exactly has power over prediction markets.
The federal government says it’s the Commodity Futures Trading Commission (CFTC). The agency normally has a bipartisan five-member commission, but due to historic changes since Trump returned to the White House, it now has just one chairman, Michael Selig.
Mr. Selig said he was working to prevent insider trading, but his tone on prediction markets was less aggressive.
“We’re not the police force picking out which contracts people should and shouldn’t be able to trade,” he said recently.
Meanwhile, state and tribal governments are itching to take enforcement action against prediction markets. They have been involved in dozens of lawsuits against the CFTC since last year, alleging that the agency has authority over platforms that, in their view, are essentially a form of gambling.
The high-stakes issues at the heart of the series of lawsuits could ultimately reach the Supreme Court.
trump factor
Mr. Trump’s close ties to the industry also hinder future efforts in Congress to crack down on prediction markets.
President Trump has said he is “not satisfied with any of it,” but his own son, Donald Trump Jr., serves as an advisor to both Calci and Polimarket. The president’s social media company, Truth Social, launched a feature last year called “Truth Predict.”
These constraints seem to have blinded the president to the evils of the online gambling world, which he lamented in a recent conversation with reporters.
“Unfortunately, the whole world has become like a casino,” he says.
Zachary Schermele is a Congressional reporter for USA TODAY. You can email us at zschermele@usatoday.com. Follow him on X at @ZachSchermele and on Bluesky at @zachschermele.bsky.social..
