Congress Is Coming for Prediction Markets—and Both Parties Agree
Bipartisan congressional scrutiny of Kalshi and Polymarket has exploded after a heated CFTC hearing. Insider trading, Trump family ties, and a one-person regulator are all on the table.
- CFTC Chair Michael Selig told Congress his agency is investigating “a large number” of suspected violations across prediction market platforms.
- Both Democrats and Republicans grilled Selig on insider trading risks, Trump family connections to platforms, and whether the CFTC can actually police an industry handling billions in weekly bets.
- The commission is operating with just one confirmed member—a structural problem lawmakers say undermines the entire regulatory mission.
The prediction market industry just survived its most hostile week on Capitol Hill—and this time, both parties brought knives. CFTC Chair Michael Selig testified Thursday before a House panel where lawmakers from both sides of the aisle pressed him on insider trading risks, platform accountability, and whether his one-person agency can actually oversee an industry now processing billions in weekly transactions, according to GamblingNews.
Selig’s message was blunt: the agency is actively investigating suspected violations and receives a steady flow of tips each year. “Any attempt to exploit privileged information or manipulate outcomes would face serious legal consequences,” he told the committee. But the hearing quickly revealed that promises of enforcement aren’t enough for legislators watching well-timed trades appear to anticipate major geopolitical events.
Why Congress Is Done Giving Prediction Markets a Pass
The bipartisan anger isn’t new—but the intensity is. In March, Senators Adam Schiff and John Curtis introduced a bill to ban sports betting on prediction platforms after the NFL formally demanded that Kalshi and Polymarket pull contracts on injuries and draft picks. Now, the scope has widened well beyond sports.
At Thursday’s hearing, Democrats questioned whether the current regulatory framework can keep pace with an industry that’s gone from niche experiment to mainstream financial product in under two years. Republicans, meanwhile, praised Selig’s enforcement posture but pressed him on whether the CFTC has the resources to follow through. Both sides agreed on one thing: the current setup isn’t working.
Particular attention fell on Donald Trump Jr.’s advisory and investment ties to major prediction market platforms. Selig acknowledged awareness of the connections but declined to speculate on their implications, maintaining that the agency applies rules uniformly. That answer satisfied nobody in the room.
The structural problem is hard to ignore. The CFTC is designed as a five-person bipartisan commission—it’s currently operating with one confirmed member. Several representatives argued that concentrating regulatory authority on a single individual undermines the intent of congressional oversight. When the person making enforcement calls on prediction markets also sets policy, investigates violations, and testifies before Congress, the checks and balances get thin.
The Legal Battle Nobody’s Winning
Meanwhile, the courts are creating their own chaos. State governments and tribal authorities are pushing back against federal oversight, arguing that prediction markets look and function like gambling operations and should fall under state jurisdiction. The Ninth Circuit is currently weighing Nevada’s legal battle with Kalshi and Crypto.com, while the CFTC defends its claim that event contracts qualify as derivatives subject to federal regulation.
The question of whether prediction markets are financial instruments or gambling isn’t academic—it determines who regulates them, how they’re taxed, and whether they can operate at all in certain states. Multiple observers expect the issue to reach the Supreme Court.
What makes this moment different from previous regulatory skirmishes is the sheer scale of money involved. Charles Schwab confirmed this week it’s eyeing prediction markets for financial events, joining a field that includes the NYSE parent company’s $1.64 billion investment in Polymarket. The industry isn’t a scrappy startup experiment anymore—it’s Wall Street infrastructure. And Congress, for once, is united in wanting answers before the next trade that looks a little too well-timed.
