Prediction markets like Polymarket and Kalshi are turning Washington into a casino as people bet on political outcomes. White House staff got warnings after suspicious trading spikes. As one person who recently left a major US regulator put it, "Everything is gambling now." Many officials still use inside information today.
In a city where almost everyone is privy to some kind of inside information, betting on politics has jumped ahead of midterm elections
On a sunny DC weekend this year, politicos of all stripes flocked to a pop-up bar called "The Situation Room" where large TV screens tracked live odds for a US-Iran ceasefire and who would win the US presidential nomination in 2028.
The unusual boozer was part of a publicity stunt by prediction market provider Polymarket, which, along with Kalshi, spearheads a multibillion-dollar industry that allows people to bet on everything from trial verdicts to the weather.
Not everyone in Washington saw the funny side to Polymarket's marketing blitz. In a city where almost everyone is privy to some kind of inside information, prediction markets are accused of having a deleterious effect on the business of politics itself.
Earlier this year, after a number of suspiciously timed spikes in trading around the US-Iran war, White House staff were warned not to place bets on platforms like Kalshi or Polymarket. Federal charges were brought in April against a US special forces soldier who allegedly made $400,000 betting on the removal of Venezuelan leader Nicolás Maduro. He has pleaded not guilty. In the same month, Kalshi said it had found three candidates for national office, in Minnesota, Texas and Virginia, placing bets on or against themselves.
This August, President Donald Trump's former teleprompter operator was fined for betting on the content of the president's speeches, and former congressman George Santos was banned from Kalshi for allegedly failing to co-operate with an investigation into trades related to his attendance at this year's State of the Union address. He accused the company of attention seeking.
Yet in conversations with young congressional staff and officials, I am told that none of this has stopped people from trying to turn the gossip that pervades the hallways of the House, Senate and government agencies into potential profits. As one person who recently left a major US regulator put it, "Everything is gambling now.'
Jonathan Cohen, a gambling policy expert at the American Institute for Boys and Men think-tank, told me this outcome was -- pardon the pun -- predictable, given Polymarket and Kalshi's business model incentivises people to "leverage whatever special knowledge they have".
For DC's young punters, that knowledge need not be as exciting as a classified dossier. Among the political bets that appear on Polymarket are whether Trump or a cabinet official will use certain words or phrases in an upcoming speech -- information that many junior staffers might be privy to, along with those with whom they might share a home or a drink.
Personnel moves are also a popular subject. And betting on elections is rife. A congressional staff member told NPR that they had seen an advance copy of polling data for a tight race and used it to place a bet. Increasingly, Polymarket and Kalshi's odds for particular candidates are cited by analysts, a trend Cohen worries could skew public discourse. Last week, Kalshi revealed more than $1bn had already been spent in wagers on November's midterm elections.
The phenomenon extends to the private and charitable sectors too. Maziar Minovi, chief executive of the Eurasia Group advisory firm, this year banned all staff and their family members from making political bets on prediction market platforms. The Senate has also banned members and staffers from trading, and members of Congress have proposed similar legislation.
Kalshi said that it "explicitly prohibits and prosecutes insider trading of any form, including government employees trading on prediction markets". The company and its competitor Polymarket also constantly surveil for trades relating to government activity that violate their market integrity rules.
Yet the odds of a broader crackdown look slim under the Trump administration, which prefers light-touch regulation. (Donald Trump's son Donald Jr is also an adviser to both Polymarket and Kalshi). Minovi worries about the damage to the demos in the interim. "Glorifying these markets . . . seems to me corrosive to society," he said. "I think your soul gets destroyed if you normalise that sort of thing."