And since prediction markets have opened the door for people to bet on politics and elections (not to mention whether the second coming of Jesus will occur by 2027<\/a>), proponents argue that the markets may offer a more accurate picture of current events than traditional polls.\u00a0<\/p>\n In Pennsylvania, for example, traders can put their money where their mouth is on a range of political topics: Will John Fetterman leave the Democratic Party? Forty-nine percent of traders on Kalshi<\/a> think he will by the beginning of 2028 \u2013 a market that currently has a trade volume of more than $73,000. As for this year\u2019s gubernatorial race, traders on Polymarket give Democrats a 92% chance<\/a> of winning the governor\u2019s office, while traders on Kalshi give Democrats a 95% chance of retaining the office this year.<\/a>\u00a0<\/p>\n On Polymarket, the gubernatorial race market has a trade volume of roughly $17,000, and the trade volume on the Kalshi market for that same race is approaching $30,000.<\/p>\n However, while the platforms can provide new insights into sentiment on elections and political issues, they have also prompted new debates over how \u2013 and whether \u2013 lawmakers at the state and federal levels should regulate these emerging markets.\u00a0<\/p>\n Prediction markets are regulated by the Commodity Futures Trading Commission<\/a>, and prediction market exchanges must clear the CFTC application process to operate. Unlike traditional gambling where participants wager against a \u201chouse\u201d with fixed odds, prediction markets offer a \u201cpeer-to-peer\u201d exchange where users trade event contracts with each other.\u00a0<\/p>\n Opinions are mixed on whether prediction markets constitute gambling. Michael Selig, chair of the Commodity Futures Trading Commission, told Axios in a May interview<\/a> that he views prediction markets and sportsbooks as \u201ctwo separate things.\u201d Officials at the Pennsylvania Gaming Control Board, which regulates sports betting in the commonwealth, largely disagree with the CFTC\u2019s position, particularly when it comes to sports.\u00a0<\/p>\n \u201cI believe that what these markets offer is sports wagering \u2013 and it\u2019s illegal under the laws of the commonwealth,\u201d Pennsylvania Gaming Control Board Chief Counsel Steve Cook told City & State in an interview, noting that Pennsylvania\u2019s chief gaming law requires anyone offering sports bets to be licensed by the state. \u201cThe CFTC and the various companies that make these markets available take the position that all state laws, including Pennsylvania’s, are preempted by federal law, which authorizes this under the Commodities Exchange Act.\u201d\u00a0<\/p>\n \u201cI think everybody acknowledges there\u2019s a conflict of laws, but their position is that federal law preempts state law, and unfortunately for us, the Third Circuit Court of Appeals, to date, have agreed that federal law likely preempts state law, so we’re sort of stuck with that decision,\u201d Cook added.<\/p>\n The topic of regulating prediction markets comes at a time when politicians and members of the military have been accused of using insider information for personal profit.\u00a0<\/p>\n Insider information<\/p>\n While prediction markets are relatively new, public officials are already growing concerned with instances of insider trading.\u00a0<\/p>\n In April, Gannon Ken Van Dyke, a U.S. Army soldier, was indicted after allegedly using classified information to profit on Polymarket bets. According to the U.S. Department of Justice<\/a>, Van Dyke reportedly used information regarding the timing of a military operation to capture Venezuelan President Nicol\u00e1s Maduro to make more than $400,000 on Polymarket.\u00a0<\/p>\n He\u2019s been charged with unlawful use of confidential government information for personal gain, theft of nonpublic government information, commodities fraud, wire fraud and making an unlawful monetary transaction. Van Dyke pleaded not guilty<\/a> to the charges in late April.\u00a0<\/p>\n Additionally, that same month, Kalshi announced<\/a> enforcement actions against three traders, all of whom were political candidates making trades on their own elections.\u00a0<\/p>\n In one instance, a Democratic candidate running in the primary for Minnesota\u2019s 2nd Congressional District traded a \u201csmall amount\u201d on the outcome of their election. In another case, a candidate running in the GOP primary for Texas\u2019s 21st Congressional District did the same thing. Both candidates reached a settlement with Kalshi, agreeing to pay fines and accept a 5-year suspension from the site.\u00a0<\/p>\n Meanwhile, in Virginia, a Democrat running in the state\u2019s U.S. Senate election allegedly traded in two separate markets related to their campaign, resulting in a $6,229.30 fine and a 5-year suspension from Kalshi.\u00a0<\/p>\n Kalshi attributed the detection of three congressional candidates trading on their own races to its new internal safeguards<\/a>, which include preemptive screenings to catch politicians and athletes from trading on their own races and games, respectively.<\/p>\n \u201cWe’ve been very forward-leaning on preventing insider information, non-public information, from being used on our platform,\u201d Sara Slane, Kalshi\u2019s head of corporate development, told City & State in an interview.\u00a0<\/p>\n In April, the U.S. Senate took action to bar its members from trading on prediction markets<\/a> \u2013 a move supported by leaders at both Polymarket and Kalshi.<\/p>\n Slane added that Kalshi, which is regulated by the Commodity Futures Trading Commission, prohibits members of Congress from trading on its platform, and that members are rejected during the application process.\u00a0<\/p>\n \u201cWe have them all flagged and identified in our system,\u201d Slane said. \u201cWhoever\u2019s getting on to Kalshi, we know who you are before you even are able to place a trade on our platform.\u201d<\/p>\n The race to regulate<\/p>\n Lawmakers at the state and federal levels alike still want to see legislative guardrails on the burgeoning prediction market industry.\u00a0<\/p>\n At the congressional level, Pennsylvania\u2019s Republican U.S. senator, Dave McCormick, has joined forces with U.S. Sen. Kirsten Gillibrand on bipartisan legislation that would create a regulatory framework for prediction markets.\u00a0<\/p>\n The bill would require individual review of specific event contracts; prohibit lawmakers and high-ranking government officials from owning event contracts; create a new Office of Retail Advocate within the CFTC to represent the interests of retail customers; and establish an advisory council focused on consumer protection.\u00a0<\/p>\n![\"In](\"https:\/\/www.newsbeep.com\/us-pa\/wp-content\/uploads\/2026\/05\/GettyImages-2272387073-inline.jpg\")
\nIn a testament to the popularity of prediction markets, Polymarket opened a pop-up bar in D.C. where traders could track current events. Photo credit:\u00a0Alex Kent\/The Washington Post via Getty Images<\/p>\n