Congress
How prediction markets landed in Congress’ crosshairs
Lawmakers are quickly coming to a realization: Odds are, Congress is going to have to do something about booming prediction markets.
The online platforms where people can bet on the outcomes of future events like elections, sports and the Oscars had already attracted attention in Washington as the industry garnered backing from Wall Street giants, Silicon Valley investors and even Donald Trump Jr.
That scrutiny has exploded in recent weeks, however, after unusual trading patterns around markets related to the U.S.-Israel war with Iran suggested possible insider profiteering. The result has been an uptick in legislation targeting the industry amid new questions about the policing of its major players.
At the center of the fight is a debate over who should regulate and tax transactions that take place on sites like Kalshi and Polymarket, which operate as financial exchanges but have become best known as sports and political betting platforms. The clash pits states and tribes against an increasingly powerful new industry that has won over key presidential appointees.
Lawmakers of both parties are also eyeing various ways to crack down on insider trading on the platforms — including by members of Congress themselves and their staffs.
“There seems to be a growing consensus that the status quo is unsustainable,” said Rep. Ritchie Torres, a New York Democrat who was an early entrant into Congress’ prediction market debate.
The platforms, once considered niche, are poised to get new scrutiny across Capitol Hill this year. Senate Commerce Committee members have discussed holding a hearing focused on the industry, according to four people granted anonymity to discuss the private conversations. The House Agriculture Committee, which oversees commodities trading, has been holding bipartisan briefings on the issue, with more expected.
Discussions about the industry largely haven’t reached the GOP leadership level on Capitol Hill, where bigger clashes such as the Department of Homeland Security funding fight have taken precedence. Asked about banning elected officials from trading on prediction markets, Senate Majority Leader John Thune said he “hadn’t thought about that” and said he’d “take a look at it.”
House Minority Leader Hakeem Jeffries — after referencing the markets’ high odds that Democrats would win the midterms — told reporters last week it was “reasonable for us to take a look at what can be done in this space and to try to find a bipartisan path forward.”
Washington is getting a crash course on the prediction markets just as the companies have broken out from obscurity to become one of the hottest areas of investment — thanks in part to President Donald Trump, whose regulators have allowed them to offer a larger menu of wagers to their customers.
Kalshi and Polymarket, which operate the largest prediction market platforms, have recently snagged mammoth valuations and inked partnership deals with everyone from BLN and CNBC to Major League Baseball. Kalshi is federally regulated by the Commodity Futures Trading Commission, a small but powerful financial watchdog. Polymarket is best known for its larger offshore prediction market, which is not regulated by the CFTC, but the company is also pushing into the U.S. with a separate, regulated venue.
Congress’ interest is rising as the fight over industry regulation plays out in the courts. State officials from Arizona to Massachusetts have argued that the prediction markets should be subject to the same rules as traditional sportsbooks and casinos. But the companies have rejected those claims, arguing that they are exclusively overseen by the CFTC. Attorneys following the legal fight expect it to eventually reach the Supreme Court.
A bipartisan group of lawmakers is backing the states’ push to regulate the platforms. Sens. Adam Schiff (D-Calif.) and John Curtis (R-Utah) have introduced legislation that would ban CFTC-regulated entities from offering products that resemble sports betting or casino games.
They are echoing concerns from state and tribal officials who say prediction markets are threatening critical tax revenue and usurping state-level consumer protections for sports bettors. Notably, Senate Agriculture Chair John Boozman (R-Ark.), whose panel oversees the CFTC, has expressed concerns about sports betting on the sites.
“What I would like to see is an economic purpose in regulated derivatives markets,” said Rep. Bill Foster (D-Ill.). “Anything that has no economic purpose, I think, should be taxed like gambling, regulated like gambling.”
The prediction market companies are fighting back, saying that the so-called events contracts they offer are sophisticated financial products — not a form of gambling. They have key allies in the fight, including Trump’s CFTC chair, Mike Selig — who, like the companies, says the agency has “exclusive jurisdiction” over prediction markets. GOP senators including Dave McCormick of Pennsylvania and Bill Hagerty of Tennessee have applauded Selig’s posture on the issue.
But esoteric arguments about the nature of gambling have only gotten so much traction in Congress. What has instead galvanized public attention is the specter of insider trading — including possible profiteering from government officials with foreknowledge of geopolitical events such as the U.S. military intervention in Venezuela or the administration’s strikes in Iran.
Possible insider bets related to the war in Iran have spurred several new bills. Reps. Nikki Budzinski (D-Ill.) and Adrian Smith (R-Neb.) introduced bipartisan legislation last week to ban members of Congress and executive branch officials from participating in prediction markets related to policy decisions and political events.
That bill has attracted support from a handful of House Democratic and GOP lawmakers, and a bipartisan group introduced similar legislation in the Senate. The Coalition for Prediction Markets, which has Kalshi as a member, endorsed the legislation soon after introduction.
But there are even broader efforts afoot. Rep. Alexandria Ocasio-Cortez (D-N.Y.) has called for stricter regulations on prediction markets, comparing them to the tobacco industry. And Sen. Chris Murphy (D-Conn.) and Rep. Greg Casar (D-Texas) are aiming to entirely ban a wide range of prediction market trading, including anything predicated on government actions or any event “where an individual knows or controls the outcome.”
The CFTC has already promised to go after insider trading on the prediction markets, and both Kalshi and Polymarket recently unveiled new measures designed to head off the improper use of inside information on their platforms.
Kalshi also recently rolled out ads across Washington highlighting that it blocks insider trading on its platform and bans trading directly related to war and deaths. Polymarket has also expanded its presence in Washington — most notably with a pop-up bar on K Street.
“Prediction markets are an emerging technology, yes, but they’re not all the same, and we want to highlight those big distinctions,” Kalshi spokesperson Elisabeth Diana said. A Polymarket spokesperson declined to comment.
If Congress does take action on the issue, it will end up with the Agriculture panels, currently led by Boozman in the Senate and Rep. G.T. Thompson (R-Pa.) in the House. Thompson promised “bipartisan hearings and member meetings” on prediction markets in a recent interview.
“It definitely is a focus,” he said. “I don’t know what the conclusion will be.”
But Republicans could be put in a tough spot as prediction market legislation gains momentum. The Trump family has had close ties to prediction markets: Donald Trump Jr. is an adviser to Kalshi and Polymarket, and Trump’s social media company announced last year plans to create Truth-Predict, a new prediction market service.
Some Democrats are skeptical Republicans will actually move to address the issue given the Trump family’s ties and their overall friendliness to the firms.
“I don’t think the Republican-led House or Senate will seriously take this on,” Sen. Jeff Merkley of Oregon said.
Jordain Carney contributed to this report.
Congress
Republicans’ faith in Mike Johnson is fading fast
Speaker Mike Johnson faced down a bruising “hell week” and ultimately pulled several key GOP bills across the line. But it came at a cost.
Republicans say Johnson’s habit of making last-minute, often contradictory promises to keep his tiny majority functioning is starting to catch up with him. Frustrations over his leadership, they say, are at an all-time high.
“I think this guy has divided us with a smile,” said Rep. Max Miller (R-Ohio), a longtime Johnson skeptic who has grown more vocal with his criticism and now says “without question” he will vote against keeping Johnson as top GOP leader in the next Congress.
This week’s chaos came to a head late Wednesday, with multiple members of key Republican factions yelling and swearing at Johnson on the House floor and in closed-door meetings.
Johnson tried to quell a rebellion among conservative hard-liners by privately reneging on an agreement with a group of midwestern Republicans that would have tied legislation allowing year-round sales of an ethanol fuel blend to the must-pass farm bill.
When some of the ethanol provision’s backers ran back to the floor to try to figure out what happened, they were too late. Some later confronted Johnson, who is now promising a future vote on the matter.
“Bullshit,” Rep. Ann Wagner (R-Mo.) yelled at the speaker as he tried to explain what happened later in the day, according to three people who participated in the huddle and spoke on the condition of anonymity.
This week’s floor chaos was just the latest example of Johnson leading crisis by crisis, ultimately pulling off GOP priorities but leaving a trail of disgruntled members and staffers in his wake, according to more than a dozen Republicans interviewed for this story.
It all comes as rank-and-file lawmakers grow increasingly worried about their ability to govern over the coming months and retain their majority in November — and amid quiet conversations about who else might be capable of leading the House GOP. While Johnson successfully managed this week to end the record shutdown of the Department of Homeland Security and fend off the lapse of a key surveillance program, more challenges loom.
A long-term deal to maintain those spy powers remains elusive, the Senate is expected to reject the farm bill House Republicans approved Thursday and members are agitating for yet another party-line reconciliation bill that stands to continue surfacing the GOP’s internal divides.
Johnson told reporters Thursday that complaints about his leadership style amounted to “fake news.”
“No one in this conference can say that I went against my word on anything,” he said. “You had requests and demands on opposite sides of the conference that were literally irreconcilable. If you meet one group’s demands, you can’t meet the other. And so it takes a lot of time to get people to a consensus and an agreement on that.”
“Everybody’s very happy with their work,” Johnson said. “It’s all smiles.”
Wagner hardly appeared thrilled as she recounted Wednesday’s events in an interview Thursday.
“We were promised a vote on this,” she said of the ethanol measure. “We went back to do our work in our offices, and then a deal was cut on the floor. … And once we became aware of it, we needed to extend those discussions.”
The ethanol measure, allowing year-round sales of a fuel blend high in corn-derived alcohol, vexed a coalition of Republicans who saw the measure as harming petroleum and refiner industry interests in their districts as well as ultraconservatives who had ideological objections.
The result of the infighting was that a Wednesday vote on the budget blueprint for a planned immigration enforcement funding bill stayed open for more than five hours as dozens of Republicans withheld their votes until they got a satisfactory response.
To placate them, Johnson ultimately agreed to delay consideration of the farm bill for a time — only to reverse himself again after livid ag-state members demanded a vote on the farm bill before the scheduled weeklong recess, leaving the ethanol issue for later.
That in turn enraged hard-liners like Rep. Chip Roy (R-Texas), who accused Johnson of going back on his word from only a few hours earlier.
In a closed-door meeting just off the House floor Wednesday night, Rep. Mariannette Miller-Meeks (R-Iowa) complained about how farm-state members always vote in line with GOP leadership only to get jilted on their own priorities.
During a separate “family meeting” in Johnson’s office, Rep. Michelle Fischbach (R-Minn.), who sits in a Johnson-appointed slot on the Rules Committee, asked why they should believe the speaker when he promised a future vote on the ethanol issue. Johnson had already promised the group a vote in late February that did not materialize.
Miller, a former White House aide to President Donald Trump, said he ultimately agreed to vote for the budget measure out of his support for Trump and after Homeland Security Secretary Markwayne Mullin personally asked him to. But he said the episode demonstrated why he thinks Johnson is unfit to lead Republicans beyond this Congress.
“It’s pretty debilitating when you’re supposed to follow a guy into battle, and I wouldn’t trust him to get out of a wet paper bag with an M4,” he said.
Johnson was happy to put the 76-day DHS shutdown behind him Thursday, telling reporters that “sometimes it’s an ugly process” but that he has “never broken my word to a single person in this building.”
But the instances of disarray on the floor have piled up in recent months, and not all of them can be attributed solely to the GOP’s tiny majority. Last week, Johnson and other leaders appeared unaware of serious concerns in his conference’s ranks about legislation curbing Endangered Species Act protections. They were forced to postpone consideration of the bill.
The week before that, the House cleared an extension of temporary immigration protections for people from Haiti — the latest instance where a Democratic-led discharge petition had succeeded in commandeering the GOP agenda.
Many Democrats have been happy to watch the internal drama and gloat, mocking the GOP’s disarray and papering over the pains their own caucus experienced when they were in power. But they have insisted the drama of the past few months stands alone.
“First reaction is: ‘Oh, my God, this would never happen under Nancy Pelosi,’” Rep. Don Beyer (D-Va.) said in an interview, harking back to speakers of the past. “In fact, it probably wouldn’t have happened under John Boehner or Paul Ryan or even Kevin McCarthy.”
Johnson has defenders inside the GOP ranks, such as Rep. Mike Lawler (R-N.Y.), who said “he’s doing fine” and “the bills are moving.” He also continued to enjoy the support of the most important Republican — Trump — who has shown no outward sign of dismay with Johnson’s leadership.
“These are complex issues, and sometimes they take more than five minutes to work through,” Lawler said.
Johnson will be tested as soon as lawmakers return from recess. The pro-ethanol Republicans say Johnson pledged to orchestrate a standalone vote on their measure the week of May 12, according to six people involved in the talks. Many Republicans expect it to fail since it will no longer be attached to a must-pass bill.
“Do I believe him? Probably not,” one of the House Republicans involved said about that timeline.
Wagner, when asked whether she had confidence in Johnson and GOP leaders, singled out House Majority Leader Steve Scalise for having “really stood up in the pack” and “gave his word in terms of how we would move forward.”
Even the members who weren’t part of the back-and-forths over ethanol blends or surveillance safeguards or budget priorities this week were dismayed by how it all went down.
Rep. Daniel Webster (R-Fla.), a veteran House member who announced his retirement earlier this week, parked himself on the House floor during part of the meltdown. Asked later what he thought of the interactions, he said, “I just thought we got to get it together.”
“We probably didn’t have it together when we started voting,” he said. “Probably should have waited until we were sure. It’s a lot of wasted time.”
Congress
Anthropic, OpenAI back Warner-Budd workforce data bill
A bipartisan Senate bill that would create a federal framework to track how artificial intelligence is reshaping the U.S. workforce has won backing from Silicon Valley tech giants including Anthropic, Google, Microsoft and OpenAI.
Sens. Mark Warner (D-Va.) and Ted Budd (R-N.C.) introduced the Workforce Transparency Act on Thursday, which intends to give Washington the real-time information needed to develop policy solutions for economic disruption and job losses associated with the technology.
The legislation would direct the Labor Department to collect and publish anonymized data on AI adoption across the public and private sectors. Data collected would include how workers use the technology and how that usage evolves over time.
The proposal comes as anxiety rises in Washington about the long-term effects of AI on the labor market and as both political parties craft messaging to respond to public concerns about the technology.
It would also establish a voluntary reporting system where companies and agencies can submit AI adoption data, and would then make anonymized versions of the data available to businesses, researchers and agencies.
Microsoft’s Corporate Vice President of U.S. Government Affairs Fred Humphries said the framework is helpful for “understanding AI deployment, productivity gains, and the creation of new jobs.”
“We know AI is beginning to transform work, but we don’t have enough data to understand how,” said Joshua New, director of policy at SeedAI, a nonprofit focused on American AI readiness that’s backing the bill.
The proposal is also supported by Alliance for Secure AI, Business Software Alliance, SCSP Action Program and Erik Brynjolfsson, a senior fellow at the Stanford Institute for Human-Centered AI.
Warner has made this issue a cornerstone of his reelection campaign, launching an ad in December highlighting how the rise in AI adoption is coinciding with steep job losses and an affordability crisis in the U.S.
CLARIFICATION: Updates to clarify Fred Humphries’ job title.
Congress
Trump signs DHS legislation, ending record-breaking shutdown
President Donald Trump signed bipartisan legislation on Thursday to fund key agencies at the Department of Homeland Security, officially concluding the record-breaking shutdown.
After more than 10 weeks, the president’s signature restores funding to the Coast Guard, TSA, Secret Service, FEMA and the Cybersecurity and Infrastructure Security Agency, along with other sub-agencies that don’t touch immigration enforcement. Congressional Republicans are separately working to enact tens of billions of dollars for Border Patrol and Immigration and Customs Enforcement through a party-line reconciliation package, a process that progressed this week with the adoption of a framework to unlock a special budget authority to bypass the Senate filibuster.
House Republicans pushed past internal divisions as the White House and DHS warned stopgap funds to cover missed paychecks — pulled from the One Big Beautiful Bill — would run out within days. Agencies were bracing for additional furloughs as soon as next week, as DHS staffers were expected to get their final paychecks on May 8, according to an administration official, granted anonymity to share the timing.
While some immigration agencies have yet to be funded, enforcement operations were already paid for under last year’s GOP megabill. ICE and Border Patrol agents never missed a paycheck.
Still, the DHS shutdown dragged on for 76 days, leaving the agency in limbo at a critical moment on a number of fronts — from national security concerns to hurricane preparedness and lingering impacts on U.S. travel. During that time, Secretary Kristi Noem was fired and Sen. Markwayne Mullin confirmed as the new head of the agency, while the lengthy shutdown left staff dejected at a time when the department was trying to regain its footing after months of turmoil.
The agency, which oversees ICE and CBP, has been at the center of the monthslong funding fight on Capitol Hill. In the wake of the Trump administration’s deadly operation in Minneapolis, Democrats stayed united in resisting additional funding for those agencies without additional guardrails placed on immigration enforcement. Democrats ultimately failed to gain significant policy concessions from the Trump administration, and have questioned why the White House needs more funding for immigration agencies when it has billions remaining for border security and deportations from last year’s GOP megalaw.
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