The US Senate took a rare unanimous action. He voted Thursday to ban chamber participants, staff and leaders from betting on market forecasts. Senate Resolution 708 passed by unanimous consent and took effect immediately as an amendment to the standing rules of the Senate.
The vote came eight days after federal prosecutors indicted a U.S. Army Special Forces master sergeant for using classified information to make more than $400,000 on Polymarket, and a week after Kalshi fined three congressional candidates for betting on their own races.
Republican Senator Bernie Moreno introduced the measure. Democratic Sen. Alex Padilla expanded it to include Senate staff.
Moreno put the problem bluntly. “U.S. senators do not have to engage in speculative activities like predicting markets while receiving a taxpayer-funded salary,” he said, according to Reuters.
Senate Democratic Leader Chuck Schumer supported the move. He warned against transforming public service into speculation.
“We must never allow Congress to turn into a casino where members representing the public can bet on wars or economic crises,” Schumer said.
Prosecutors followed U.S. Army Master Sgt.’s gamble
The vote did not take place in a vacuum. This followed a case that stunned both entrepreneurs and regulators.
Federal prosecutors accused Gannon Ken Van Dyke, a 38-year-old Army Special Forces master sergeant stationed at Fort Bragg, of using classified information to place bets on Polymarket. These exchanges were linked to Operation Absolute Resolve, the US military mission that captured Venezuelan President Nicolás Maduro in Caracas on January 3.
Van Dyke “was involved in the planning and execution” of the operation, the Justice Department said in announcing the indictment. Prosecutors say he placed approximately $33,034 in 13 bets between Dec. 27 and Jan. 2, all on “Yes” positions for contracts calling for U.S. forces to enter Venezuela by Jan. 31.
The bets earned him a profit of approximately $409,881. The Commodity Futures Trading Commission has filed a parallel civil complaint, calling it the first insider trading action involving prediction markets.
Van Dyke pleaded not guilty Tuesday in Manhattan federal court and was released on $250,000 bail.
Experts warn forecast markets remain vulnerable
For many experts, this case confirms long-standing concerns.
“The idea that insider trading is somehow allowed in market forecasting is a myth,” said David Miller, director of enforcement at the CFTC. He named insider trading in prediction markets as one of the agency’s five enforcement priorities.
Academic research published days earlier reached a similar conclusion. Columbia law professor Joshua Mitts and University of Haifa professor Moran Ofir analyzed two years of Polymarket data through February 2026 and identified more than 210,000 suspicious wallet-market pairs.
Flagged traders posted a 69.9% win rate, well above chance, and accumulated approximately $143 million in overall abnormal profits.
Mitts told American Banker that prospective market regulation is “much trickier” than securities market enforcement because contracts are commodities, not securities, and therefore fall outside the SEC’s classic insider trading framework.
When the results are yes or no and trading is limited, even an informed bet can move the market.
The ban on polymarkets has limits
Despite this strong vote, the Senate’s action has obvious limits. This is not a criminal law. It’s an internal rule. This means that the Senate controls itself. Sanctions may include reprimands, loss of committee roles, or fines related to ethics violations.
But there is an important catch.
If a lawmaker uses privileged information, existing federal laws could still apply. Regulators and prosecutors can still intervene. The rule therefore acts more like a safeguard than a hammer. It is designed to stop behavior before it starts.
How does this ban compare to the ban on stalled stock trading?
A stricter, simpler rule was adopted in a single afternoon. The broader ban on stock trading, debated for nearly a decade, remains stalled. Sens. Todd Young, R-Ind., and Elissa Slotkin, D-Mich., introduced separate legislation to prohibit all federal elected officials and government employees from using inside information on market forecasts.
Young called Resolution 708 “a good first step.”
Prediction markets remain a global gray area
Prediction markets around the world fall into a legal gray area. In the United States, regulators are starting to treat them as financial derivatives.
In the UK, the Financial Conduct Authority has taken a cautious approach. Across Europe, the rules vary considerably. Some countries treat them like games of chance. Others treat them as financial instruments.
This patchwork creates gaps. And these gaps can be exploited.
Regulators are closely monitoring the Van Dyke case. A conviction would set a precedent for how Rule 180.1 of the Commodity Exchange Act applies to classified government information.
As Cryptopolitan reported in March, Polymarket has already updated its rules on insider trading on its DeFi platform and its US exchange, citing pressure from regulators and the Ritchie Torres bill that attracted 40 Democratic co-sponsors.
