U.S. prediction markets face scrutiny over drug trial, FDA approval contracts

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U.S. prediction markets under scrutiny

Highlights

Senators Angela Alsobrooks and Ron Wyden requested HHS detail steps to mitigate risks from prediction markets on clinical trials and FDA approvals.
The senators' letter seeks internal HHS communications, platform interactions, and analyses regarding event contracts tied to drug development outcomes.
Kalshi introduced safeguards for drug-related contracts in July, including late-stage trial limits, post-enrollment listings, and employee verification for all traders.

Senators seek safeguards from HHS

As first reported by CNBC, Sens. Angela Alsobrooks and Ron Wyden are pressing the Department of Health and Human Services to detail what steps it has taken to mitigate risks linked to event contracts on clinical drug trials and FDA approvals.

In a Wednesday letter to HHS Secretary Robert F. Kennedy Jr., the senators say allowing people to bet on the outcome of trials and drug approvals could undermine the scientific process, create distorted incentives for researchers, harm trial participants and lead to dangerous medical outcomes. They also raise concerns that such markets could influence how patients decide whether to join a trial.

The letter asks HHS to provide internal communications about staff participation in prediction markets tied to matters overseen by the department. It also seeks communications between HHS and prediction market platforms, the Commodity Futures Trading Commission, which regulates event contracts, and any internal analyses on the potential effects of those markets.

Platform controls and broader market impact

Kalshi and Polymarket both offer contracts tied to drug development milestones, though Polymarket's versions are available only on its international exchange, which is not regulated in the U.S. Kalshi says it introduced safeguards when it launched the markets in July, including limiting contracts to late-stage trials and listing them only after enrollment has been completed.

The company also says it uses employee verification technology for all traders in those markets. In July, Kalshi CEO Tarek Mansour said drug development is highly constrained by limited access to information and that the platform aims to surface data while maintaining market integrity.

The senators say HHS, the FDA and the National Institutes of Health must protect the drug development process and preserve public trust by preventing people from profiting from the success and approval of medicines. Kalshi, Polymarket and HHS did not immediately respond to requests for comment.

Earlier, we looked at the AstraZeneca insitro partnership to advance AI-driven drug discovery for liver and heart diseases.

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