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.

Washington is locked in a high-stakes game of chicken over Department of Homeland Security funding, raising the possibility that thousands of federal workers could go unpaid for several more weeks — if not longer.

The shutdown is already the longest ever experienced by any part of the federal government, and in recent days the political sparring has gone from being a mostly partisan showdown between Republicans and Democrats into a messy internal battle for the GOP.

Both the House and Senate have adjourned for two weeks, with neither chamber seriously considering returning early despite a wave of online outrage and calls from the White House to return to session. Instead, House Republicans and Senate Republicans have spent the last several days pointing fingers at each other, while Democrats dig in against funding immigration enforcement agencies without implementing guardrails the GOP has resisted.

“The House has their process, we have ours and this happens periodically,” Sen. John Hoeven (R-N.D.) told reporters Monday.

There is no immediate hope the standoff, which has affected tens of thousands of workers since it began Feb. 14, will soon end. An administration official granted anonymity to speak candidly said that “people are thinking this will go into the summer.”

“Morale is low. The TSA getting paid while the rest of us summer is not playing well inside the building,” the official added.

Bipartisan negotiations over immigration enforcement changes have gone almost nowhere, according to several people granted anonymity to candidly describe the talks. House and Senate Republicans are in a public tug-of-war over their competing Plan Bs. And President Donald Trump is doing little to unite his party behind a consensus position — let alone pushing them to cut a deal with Democrats.

Perhaps most worrying for those eager to end the stalemate is that the strongest impetus for a deal — the hourslong security lines at some U.S. airports — is already dissipating.

White House press secretary Karoline Leavitt defended Trump’s decision to step in and fund TSA paychecks — a move privately encouraged by some Republicans — saying that the president had to do “what’s right to end this crisis that we’ve had at air travel and at airports across the country.”

But a DHS official granted anonymity to speak candidly said Trump’s decision to pay airport screeners, as well as the unanimous passage of a Senate GOP plan to fund the vast majority of the department, stripped Republicans of their main pressure point.

“Remember in the last shutdown, it was airport chaos that forced the seven Democrats to switch sides and fund the government,” the official said.

While about 50,000 airport security officers are now getting paid under Trump’s executive action, thousands more workers remain furloughed or working without pay. Those include more than 2,000 employees of the premier federal cybersecurity agency, more than 4,000 FEMA workers as well as more than 1,000 Coast Guard civilians.

DHS spokesperson Lauren Bis said in a statement that the record-breaking shutdown was affecting department employees tasked with protecting Americans and visitors for the upcoming World Cup soccer tournament and America 250 anniversary celebrations,

“Democrats need to stop holding these hard-working DHS employees’ pay hostage and putting politics above national security,” she said.

But as far as Democrats are concerned, they have struck a shutdown-ending deal — the Senate legislation passed early Friday morning by voice vote that would fund all of DHS except for Immigration and Customs Enforcement and some parts of Customs and Border Protection. House Republicans rejected that bill and passed their own legislation late Friday that would fund all of DHS through May 22.

No senator attempted to pass the House measure in a brief Monday morning session, and in a sign that a consensus deal is nowhere close, some Senate Republicans want to instead try to fund the entire department through the party-line budget reconciliation process. That would bypass Democrats but require time-consuming procedural steps and potentially create messy new divides among Republicans.

Still, Hoeven said Republicans might have no better choice than to enact DHS legislation themselves for the remainder of Trump’s term.

“We’re not going through this again with the Dems,” he told reporters after the Senate session Monday. “We’re taking this off the table.”

Sen. John Kennedy (R-La.) also argued Republicans need to accept that Democrats will never fund the immigration enforcement agencies that became politically toxic on the left after federal agents killed two people in Minneapolis in January.

“The only thing I know to do is to take the Democrats out of it,” Kennedy said in an interview. “Just do the entire DHS budget under reconciliation.”

The problem for Republicans is they want to do much more than DHS funding in reconciliation, with the House and Senate GOP holding vastly different visions for the effort. Conservatives in both chambers are pushing to offset any new spending with cuts elsewhere — a politically tricky ultimatum.

Under the plan Senate GOP leaders passed last week, the consensus funding bill agreed to by Democrats would be paired with a reconciliation bill narrowly focused on immigration enforcement. Senate Majority Leader John Thune warned that trying to do all of DHS under the party-line process “gets a lot more complicated.”

Instead, Thune approached Senate Minority Leader Chuck Schumer after the House rejected the Senate-passed bill to try to find another path to funding as much of DHS as possible. But expectations for a deal are low, given Democrats’ repeated rejections of stopgap funding bills. Still, Thune is expected to spend most of the two-week break trying to find a bipartisan path out of the funding impasse, according to a Senate GOP aide granted anonymity to disclose private scheduling.

A bipartisan group in the House has pitched its own plan to pair DHS funding with immigration enforcement changes. But the Senate conversations aren’t headed in that direction, absent a shift from the White House, with Thune saying the “ship has sailed” after Democrats rejected multiple GOP offers on enforcement restrictions.

Thune is dealing with pressure from the White House, online activists, House Republicans and even some of his own members to bring the Senate back into session before its scheduled April 13 return date.

In a head-scratching subplot, a few Senate Republicans have publicly suggested they did not agree with the deal they could have derailed in advance, while others have privately questioned Thune’s strategy given how quickly it unraveled in the House.

The bill was approved at 2:19 a.m. Friday after Senate GOP staffers ran a “hotline” — an established process for clearing measures slated for passage by voice vote or unanimous consent.

In addition to checking with Senate offices in the hours before the vote, Thune also briefed his conference Thursday evening on a developing plan to try to pass a bill funding as much of DHS as possible, leaving ICE and parts of CBP for reconciliation.

But Sen. Rick Scott (R-Fla.) said later that morning he opposed the deal. Asked why he didn’t object to the hotline or on the floor — or if he would try to pass the House bill in the Senate — a spokesperson pointed back Monday to his social media posts.

Sen. Mike Lee (R-Utah) similarly expressed regrets online after his social media followers aired outrage about the overnight vote. He explained on X that he “had every reason to believe President Trump and House Republicans were on board” with the play and thus “declined to call in an objection.” Spokespeople for Lee didn’t respond to questions Monday.

Hoeven, a close Thune ally, defended the majority leader Monday saying he “absolutely” believed leadership was handling the DHS funding fight well. He brushed off some of the intraparty grumbling as sour feelings about the long-running standoff.

“I think there’s some real frustration because the Democrats want to go back to open borders, and they’re blocking funding,” Hoeven said. “So I think you’re hearing some of that from senators.”

Eric Bazail-Eimil, Katherine Tully McManus, Calen Razor and Riley Rogerson contributed to this report.

The House Rules Committee advanced a measure Friday evening that would fund the entirety of the Homeland Security Department through May 22 — without setting up debate or a separate vote on the funding bill itself.

The panel, after a raucous meeting that devolved into shouting at multiple points, voted 8-4 on party lines to advance the measure to the floor.

The rule includes a “deem and pass” provision, a tactic that allows legislation to be passed by the House automatically once the rule itself is adopted. While there will be one hour of floor debate and a vote on the rule, there will not be a standalone House vote on the DHS spending bill.

Rep. Jim McGovern (D-Mass.) described himself as needing “a neck brace” from the whiplash of hearing Republicans argue for hours that the Senate’s early-morning voice vote on a different DHS funding measure was “shameful” for lack of transparency and accountability.

House Appropriations Chair Tom Cole (R-Okla.) accused the Senate of moving their bill “in the middle of the night, with the smell of jet fumes in the air,” lamenting that the House was left “to take it or leave it.”

House leaders, McGovern suggested, have chosen a similar path by fast-tracking the eight-week DHS stopgap.

“You’re in charge,” he told Rules Chair Virginia Foxx (R-N.C.). “You can do whatever the hell you want to do.”