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.
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.)
It makes sense to ban government officials from betting. It's hard enough to enforce insider trading. With legal betting, it's literally impossible.
Another worrying issue with betting is just how prevalent the last election was in betting markets. In elections won by thousands or even just hundreds of votes, betting markets can skew results where betters vote for someone just purely for the bet and persuade, shill for the person they bet on.
I can imagine betters placing a bet on a candidate and then launching a defamation campaign against the other.
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.
If they're smart they'll have multiple accounts with bets each way netting to ~0 on all kinds of topics, and just omit the losing trade on the information they actually have.
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.
Political outcomes is the biggest. Businesses (and individuals) can be strongly (financially) affected by who's elected. I'd been very curious in the past about political outcomes but had never used prediction markets, so I built a little tracker that inputed the probabilities based on scraping ~14 betting sites. I had to do it on a market-by-market basis, and there were lots of edgecases. Having them all in one place (or two; kalshi and polymarket) makes life much simpler.
Prediction markets have also directly affected my travel planning, helping me avoid a country that wasn't at war at the time but had (in my judgement) a too-high risk of war.
You're completely right about thinly traded markets; those are way, way less accurate. But they also offer the greatest opportunity for someone to bet the other way, which has the effect of 'correcting' the market.
> 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.
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.
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.
From Wikipedia[0] because I can't be bothered to read more than a few paragraphs:
> In 1909, well before the Securities Exchange Act was passed, the United States Supreme Court ruled that a corporate director who bought that company's stock when he knew the stock's price was about to increase committed fraud by buying but not disclosing his inside information.
Based on anti-fraud common law alone the court decided it was illegal for an insider to trade stocks with non-public information. An explicit law would be nice, but a reasonable interpretation of basic law would see most of our ruling class behind bars. This is only highly-contested and technical because we've let our standards slip so far.
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.
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.
Blindly trying things without taking signals from outcomes of the past seems like madness. If you have evidence you have failed at walking many times, should you be putting your energy and efforts into running and jumping instead of continuing to pursue walking?
That's not what I'm doing and I think you know that. Reform takes time. If everyone gave up just because things were difficult n times nothing in government would ever change. The state is not a startup. Behind every significant piece of legislation is a battle.
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.
Ah interesting thanks for pointing out the ambiguity in my statement. I definitely did not intend that ambiguity but you also rightly point out it sort of works either way. I would think this would lead to more upvotes than downvotes but perhaps a trend of cynicism also is reflected in assuming the least favorable interpretation.
Thanks for pointing that out.
For the record, I meant the latter. Let the downvotes commence!
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.
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.
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.
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."
Seems like you’d get a secondary proxy market popping up overnight. Like domain privacy for degenerates.
That's why you make the regulations like AML regulations, where it's a crime to obfuscate the source of the wager too.
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.)
I mean, North Korea has some very deadly incentives if this whole "buy your prediction" market is brought online.
Don't forget relatives, useful idiots, and billionaire special envoys!
The latter two groups often overlap, even
It makes sense to ban government officials from betting. It's hard enough to enforce insider trading. With legal betting, it's literally impossible.
Another worrying issue with betting is just how prevalent the last election was in betting markets. In elections won by thousands or even just hundreds of votes, betting markets can skew results where betters vote for someone just purely for the bet and persuade, shill for the person they bet on.
I can imagine betters placing a bet on a candidate and then launching a defamation campaign against the other.
> 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
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
If they're smart they'll have multiple accounts with bets each way netting to ~0 on all kinds of topics, and just omit the losing trade on the information they actually have.
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.
Accurate info on what? Most markets have almost no liquidity, outside of sports and crypto
Political outcomes is the biggest. Businesses (and individuals) can be strongly (financially) affected by who's elected. I'd been very curious in the past about political outcomes but had never used prediction markets, so I built a little tracker that inputed the probabilities based on scraping ~14 betting sites. I had to do it on a market-by-market basis, and there were lots of edgecases. Having them all in one place (or two; kalshi and polymarket) makes life much simpler.
Prediction markets have also directly affected my travel planning, helping me avoid a country that wasn't at war at the time but had (in my judgement) a too-high risk of war.
You're completely right about thinly traded markets; those are way, way less accurate. But they also offer the greatest opportunity for someone to bet the other way, which has the effect of 'correcting' the market.
Elections usually also have good liquidity.
https://en.wikipedia.org/wiki/Efficient-market_hypothesis
Aren't there already basic laws against officials profiting from their role?
> 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.
Does this include the stock market?
How is any of this going to get passed without enforcement of anti-trust and an end to citizen united?
What does anti-trust enforcement and citizens united have to do with being able to pass laws on insider trading?
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.
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.
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.
It doesn't break the law.
From Wikipedia[0] because I can't be bothered to read more than a few paragraphs:
> In 1909, well before the Securities Exchange Act was passed, the United States Supreme Court ruled that a corporate director who bought that company's stock when he knew the stock's price was about to increase committed fraud by buying but not disclosing his inside information.
Based on anti-fraud common law alone the court decided it was illegal for an insider to trade stocks with non-public information. An explicit law would be nice, but a reasonable interpretation of basic law would see most of our ruling class behind bars. This is only highly-contested and technical because we've let our standards slip so far.
0: https://en.wikipedia.org/wiki/Insider_trading
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.
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)
If we can't ban them from trading stocks, good luck with this.
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.
Blindly trying things without taking signals from outcomes of the past seems like madness. If you have evidence you have failed at walking many times, should you be putting your energy and efforts into running and jumping instead of continuing to pursue walking?
That's not what I'm doing and I think you know that. Reform takes time. If everyone gave up just because things were difficult n times nothing in government would ever change. The state is not a startup. Behind every significant piece of legislation is a battle.
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.
Ah interesting thanks for pointing out the ambiguity in my statement. I definitely did not intend that ambiguity but you also rightly point out it sort of works either way. I would think this would lead to more upvotes than downvotes but perhaps a trend of cynicism also is reflected in assuming the least favorable interpretation.
Thanks for pointing that out.
For the record, I meant the latter. Let the downvotes commence!
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.
Most criminal activity is hard to change when it's already happening. There is no reason to mollify the problem further.
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.
> you have the perfect recipe to undermine the public’s belief that government officials are working for the public good
The 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 actors
And this is designed to "increase trust?"