Washington prediction markets expand as political betting raises integrity risks

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Washington political betting risks

Highlights

Political betting surges as Polymarket and Kalshi expand election-related contracts, with over $1 billion wagered on November's midterm elections.
White House staffers, national candidates, and political insiders faced warnings, fines, and bans after using non-public information for bets on platforms like Kalshi.
Regulators, advisory firms, and the Senate increase bans and scrutiny of prediction markets, but further crackdown remains unlikely under Trump’s lighter regulatory stance.

Midterm-driven surge in political wagering

As reported by Financial Times, political betting in Washington is accelerating as prediction market operators Polymarket and Kalshi push further into election-linked and government-related contracts.

A Polymarket pop-up bar called "The Situation Room" this year displayed live odds on events ranging from a U.S.-Iran ceasefire to the 2028 U.S. presidential nomination, underscoring how the companies are marketing a multibillion-dollar business built on wagers tied to politics, court cases and weather.

The expansion is proving controversial in a city where many officials, staffers and advisers routinely encounter non-public information. Earlier this year, White House staff were warned not to place bets on platforms such as Kalshi or Polymarket after suspiciously timed trading spikes around the U.S.-Iran war. In April, federal charges were brought against a U.S. special forces soldier accused of making $400,000 by betting on the removal of Venezuelan leader Nicolás Maduro; he has pleaded not guilty.

Kalshi also said in April that it had identified three candidates for national office in Minnesota, Texas and Virginia who were placing bets on or against themselves. In August, President Donald Trump's former teleprompter operator was fined for betting on the content of the president's speeches, while former congressman George Santos was banned from Kalshi for allegedly failing to co-operate with an investigation into trades tied to his attendance at this year's State of the Union address.

Regulatory concerns spread across politics and advisory circles

Industry critics say the business model rewards users for monetising specialised knowledge, whether that involves campaign data, staffing changes or advance awareness of speech language. Jonathan Cohen, a gambling policy expert at the American Institute for Boys and Men, warns that the structure encourages people to use whatever informational edge they hold.

That concern is not limited to government. Maziar Minovi, chief executive of advisory firm Eurasia Group, this year bans staff and their family members from making political bets on prediction market platforms. The Senate also bans members and staff from trading, and members of Congress have proposed similar legislation.

Kalshi says it explicitly prohibits and prosecutes insider trading in any form, including by government employees, and says it monitors trades linked to government activity for possible rule breaches. Even so, prospects for a wider crackdown appear limited under the Trump administration's lighter regulatory approach, while Kalshi says more than $1 billion has already been wagered on November's midterm elections.

Our earlier report on the midterm campaign advertising surge detailed how Republican candidates sharply ramped up spending as polling tightened in once-safe Senate and House races. It highlighted where ad outlays jumped most and linked the late-cycle scramble to voter pressure from high fuel costs and broader affordability concerns.

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