Online betting scandals are getting worse. Will Congress intervene?

WASHINGTON ‒ As scandals continue to plague popular online betting platforms, calls within Congress to intervene are getting louder.

A series of controversies in April ‒ from political candidates profiting from their own campaigns to a soldier's alleged bet on a major military operation ‒ prompted a unanimous April 30 decision to change the Senate's rules. Senators and their staff members were banned from trading on prediction markets, where people can buy and sell bets online on future events.

Sen. John Curtis, R-Utah, vowed that it was just the beginning of a new wave of federal scrutiny. Next on the legislative agenda, he said, would be prohibiting all government officials from using insider information to bet on prediction market contracts.

"It should be everybody," Sen. James Lankford, R-Oklahoma, told USA TODAY. "Starting with members (of Congress)."

A wave of new bills has been introduced in recent months seeking to rein in the platforms. Arkansas Rep. French Hill, the Republican chairman of his chamber's Financial Services Committee, told USA TODAY the House of Representatives is looking at prohibitions for its lawmakers similar to what the Senate passed. He expects the executive branch to be reviewing its rules, too.

Yet for members of Congress putting online betting in their sights, a complicated legal and political landscape lies ahead. For one thing, states and tribal governments are in an ongoing battle with a federal agency about who has the primary authority to regulate the entities. Congress, hampered by GOP infighting, has struggled lately to do even the basics of legislating ‒ let alone add more to its plate. And President Donald Trump's complicated ties to the industry won't make pursuing regulatory efforts any easier.

Despite those challenges, Sen. Richard Blumenthal, D-Connecticut, said there's a "good chance" Congress gets more involved on the issue.

"Prediction markets cry out for some kind of legislative intervention," he told USA TODAY.

Spokespeople for both Kalshi and Polymarket, the two biggest prediction markets, referred USA TODAY to online statements in support of banning lawmakers from insider trading on their platforms, which they said is already prohibited.

A bad month for prediction markets

April was a bad month for online betting.

In the first week, Polymarket was forced to publicly apologize for allowing users to place bets on the fates of two pilots after their jet crashed in Iran. Rep. Seth Moulton, D-Massachusetts, who first brought attention to the incident on social media, called it "disgusting." (Polymarket technically prohibits Americans from using its main platform. But many users find creative ways to appear online as if they're outside the United States, which has presented a big problem for federal regulators.)

Then, on April 22, Kalshi fined and suspended three political candidates from its platform for trying to gain financially from their own primary campaigns. One of the candidates, Virginia's Mark Moran, said he bet on himself jumping in the race for Senate because he wanted to get caught and expose how Kalshi is "rife with corruption."

A day later, the Department of Justice accused an Army soldier of illegally profiting off the capture of former Venezuelan president Nicolás Maduro. The soldier, Gannon Ken Van Dyke, participated in the planning for Maduro's arrest. He allegedly made more than $400,000 by betting on the timing of the operation. He has pleaded not guilty to insider trading charges.

The incident was a "definite national security threat," said Blumenthal, a Marine Corps veteran.

A regulatory fight

One of the biggest barriers to further regulating prediction markets is a fight over who exactly has power over them.

The federal government says it's the Commodity Futures Trading Commission, or CFTC. The agency typically has a bipartisan five-person commission, but in a historic shift since Trump's return to the White House, it currently only has one: a chairman named Michael Selig.

Though Selig has said he's committed to preventing insider trading, his tone toward prediction markets has been less than aggressive.

"We’re not a merit policeman that picks and chooses which contracts people should or should not be able to trade," he said recently.

States and tribal governments, on the other hand, are itching to take enforcement actions against prediction markets. They've become involved in dozens of lawsuits against the CFTC since last year, arguing they have authority over platforms that, in their view, are essentially forms of gambling.

The high-stakes questions at the center of the swarm of litigation may ultimately end up before the Supreme Court.

The Trump factor

Also muddling any future efforts in Congress to crack down on prediction markets is Trump's close connections to the industry.

While Trump has said he's "not happy with any of that stuff," his own son, Donald Trump Jr., has served as an adviser to both Kalshi and Polymarket. Truth Social, the president's social media company, even launched a feature last year called Truth Predict.

All those ties still don't seem to have blinded the president to the online betting world's ills, which he lamented in a recent conversation with reporters.

"The whole world, unfortunately, has become somewhat of a casino," he said.

Zachary Schermele is a congressional reporter for USA TODAY. You can reach him by email at [email protected]. Follow him on X at @ZachSchermele and Bluesky at @zachschermele.bsky.social.