US Senate moves fast to ban its own members from prediction market bets

The U.S. Senate has taken a rare unanimous step. It voted on Thursday to ban lawmakers, staff, and chamber officers from betting on prediction markets. Senate Resolution 708 passed by unanimous consent and took effect immediately as a change to the Senate’s standing rules.

The vote came eight days after federal prosecutors indicted a U.S. Army Special Forces master sergeant for using classified information to win more than $400,000 on Polymarket, and one week after Kalshi fined three congressional candidates for betting on their own races.

Republican Senator Bernie Moreno introduced the measure. Democratic Senator Alex Padilla widened it to include Senate staff.

Moreno framed the issue bluntly. “United States senators have no business engaging in speculative activities like prediction markets while collecting a taxpayer-funded paycheck,” he said, according to Reuters.

Senate Democratic Leader Chuck Schumer backed the move. He warned against turning public service into speculation.

“We must never allow Congress to turn into a casino where members representing the public can gamble on wars or economic crises,” Schumer said.

Prosecutors acted on U.S. Army Master Sergeant’s bet

The vote did not happen in a vacuum. It followed a case that stunned both lawmakers and regulators.

Federal prosecutors charged Gannon Ken Van Dyke, a 38-year-old Army Special Forces master sergeant stationed at Fort Bragg, with using classified information to place wagers on Polymarket. The trades were tied to Operation Absolute Resolve, the U.S. military mission that captured Venezuelan President Nicolás Maduro in Caracas on January 3.

Van Dyke “was involved in the planning and execution” of the operation, the Justice Department said in announcing the indictment. Prosecutors allege he placed approximately $33,034 in 13 bets between December 27 and January 2, all on “Yes” positions for contracts predicting U.S. forces would enter Venezuela by January 31.

The wagers won him approximately $409,881 in profit. The Commodity Futures Trading Commission filed a parallel civil complaint, calling it the agency’s first insider trading action involving prediction markets.

Van Dyke pleaded not guilty in Manhattan federal court on Tuesday and was released on $250,000 bail.

Experts warn that prediction markets remain vulnerable

For many experts, the case confirmed long-standing concerns.

“The idea that insider trading is somehow permissible in prediction markets is a myth,” said David Miller, CFTC Director of Enforcement. He named insider trading on prediction markets as one of the agency’s five enforcement priorities going forward.

Academic research published days earlier reached a similar conclusion. Columbia Law professor Joshua Mitts and University of Haifa professor Moran Ofir analyzed two years of Polymarket data through February 2026 and identified more than 210,000 suspicious wallet-market pairs.

Flagged traders posted a 69.9% win rate, well above chance, and accumulated approximately $143 million in aggregate anomalous profit.

Mitts told American Banker that prediction market regulation is “a lot trickier” than securities-market enforcement because the contracts are commodities, not securities, and so fall outside the SEC’s classical insider trading framework.

When outcomes are yes-or-no and trading is thin, even one informed bet can move the market.

The polymarket ban has limits

Despite the strong vote, the Senate’s action has clear limits. This is not a criminal law. It is an internal rule. That means the Senate polices itself. Penalties could include reprimands, loss of committee roles, or fines tied to ethics violations.

But there is an important catch.

If a lawmaker uses insider information, existing federal laws could still apply. Regulators and prosecutors can still step in. So the rule acts more like a guardrail than a hammer. It is designed to stop the behavior before it starts.

How does this ban compare to the stalled stock trading ban?

A narrower, simpler rule passed in a single afternoon. The broader stock trading ban, debated for nearly a decade, remains stuck. Sens. Todd Young, R-Ind., and Elissa Slotkin, D-Mich., have introduced separate legislation to ban all federally elected officials and government employees from using insider information on prediction markets.

Young called Resolution 708 “a good first step.”

Prediction markets remain a global gray area

Around the world, prediction markets sit in a legal gray zone. In the U.S., regulators are starting to treat them like financial derivatives.

In the UK, the Financial Conduct Authority has taken a cautious approach. Across Europe, rules vary widely. Some countries treat them as gambling. Others treat them as financial instruments.

This patchwork creates gaps. And those gaps can be exploited.

Regulators are watching the Van Dyke case closely. A conviction would set a precedent for how Rule 180.1 of the Commodity Exchange Act applies to government-sourced classified information.

As Cryptopolitan reported in March, Polymarket has already updated its insider trading rules across both its DeFi platform and its U.S. exchange, citing pressure from regulators and the Ritchie Torres bill that has drawn 40 Democratic co-sponsors.

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