Prediction markets, online platforms where people can bet on world events, have raised concerns about insider trading and its potential impact on US elections. These markets allow users to purchase “shares” of different potential outcomes, with payouts determined by the market. However, experts warn that insider trading, where individuals with nonpublic information place wagers on events, could affect the outcome of elections.
Insider Trading in Prediction Markets
Insider trading on prediction markets occurs when people with access to nonpublic information, such as internal polling or military intelligence, place wagers on events. This can create an unfair advantage, allowing individuals to profit from their access to sensitive information. Some prediction markets have attempted to crack down on insider trading, but the practice remains a concern.
In spring 2026, NPR documented cases where campaign staffers used inside information to “buy low” on their candidate’s electoral prospects before the release of favorable polling data. Additionally, some candidates have been accused of betting on their own campaigns, which could create a scenario where a candidate’s electoral performance appears more robust than it actually is.
Regulatory Efforts
Lawmakers are beginning to respond to concerns about insider trading on prediction markets. The Senate has banned senators and their staff from trading on prediction markets, although the implementation of this policy remains uncertain. Some lawmakers have proposed limiting trading when government officials have insider information, while others have introduced legislation to ban all trading on “death markets,” which include war, assassinations, and related topics.
State governments are also taking action to regulate prediction markets. Massachusetts is suing Kalshi, a popular prediction market platform, for allowing “backdoor betting” on sports. Minnesota has become the first state to ban prediction markets altogether, while Illinois has sent cease and desist letters to prediction market operators that it claims are operating without adhering to state gambling laws.
Original reporting: KTBS 3 (Shreveport) — read the source article.
