Polymarket and Kalshi are up against a united Congress as D.C. steps up scrutiny of prediction markets

In a highly divided Congress, the urgency to regulate prediction markets has become common ground. As the United States was preparing a daring mission to rescue an airman whose fighter jet was shot down by Iran, there was money to be made.Users on Polymarket, the world’s largest prediction market, could place bets on when the airman would be rescued. When Rep. Seth Moulton, D-Mass., shared a screenshot of the activity on social media, an April 3 rescue was trading at 15% compared with 63% who were betting on April 4.After Moulton posted the screenshot and blasted this “dystopian death market,” Polymarket stopped the betting, saying the market “does not meet our integrity standards.”A former Marine who served four tours in Iraq, Moulton said he was “absolutely not satisfied with Polymarket’s response” and blamed the site for being “completely unwilling to self-regulate when it comes to betting on the lives of our service members.”“This is war profiteering and Congress needs to step in and stop it,” he said.A confrontation is brewing in Washington over prediction markets, the online exchanges that allow users to bet on the outcome of everything from a baseball game to when Jesus Christ will return.In a highly polarized Congress, the need to guard against the prediction markets being used for insider trading has become rare common ground. Members of both parties pressed the leader of a typically low-profile regulatory agency on the issue during a hearing on Thursday. The market debate is also drawing in the White House, potential presidential candidates and state leaders.“It’s a national conversation about what it means to have market integrity,” said Kristin Johnson, a former commissioner at the Commodity Futures Trading Commission, which regulates prediction markets in the U.S.In a capital that was slow to respond to the perils of tobacco, opioids and social media, the push to put guardrails on prediction markets has been uncommonly swift.The markets, which include Polymarket and its chief rival Kalshi, have been criticized for everything from undermining the integrity of sports to contributing to an online betting addiction crisis among young men. Polymarket has come under particular scrutiny as a venue for offshore trades that are beyond the reach of U.S. regulators.Donald Trump Jr., the president’s son, is on Polymarket’s advisory board and is a paid adviser for Kalshi. 1789 Capital, the venture capital firm where Trump Jr. is a partner, has invested in Polymarket.