What a Senate rule change for predictive trading portends for the private sector

As a harbinger of increasing scrutiny over those who operate and trade on prediction markets, on Thursday, April 30, 2026, Senator Bernie Moreno (R-OH) introduced S. Res. 708, “A resolution amending rule XXXVII of the Standing Rules of the Senate to prohibit Senators from trading on prediction markets.”¹ That same day, Moreno’s resolution passed, as amended, by unanimous consent.

On May 7, Representative Ashley Hinson (R-IA) introduced an identical companion rule change for the House of Representatives.²

While state and federal law enforcement have already begun to escalate their enforcement efforts, Congress, too, is increasingly likely to rein in the perceived abuse of prediction markets, especially if one or both houses of Congress change hands after the next election. It is increasingly important for operators of prediction markets and organizations whose employees and players have valuable insider information to prepare now for what is to come.

I. What does S. Res. 708 do? 

Moreno’s resolution is simple yet broad. It states:

…No Member of the Senate may enter into, or offer to enter into, an agreement, contract, or transaction that provides for any purchase, sale, payment, or delivery that is dependent on the occurrence, nonoccurrence, or [] extent of the occurrence of a specific event.³

Prior to consideration, Senator Alex Padilla (D-CA) offered an amendment, which passed unanimously, to the underlying resolution. His amendment broadened the rule to also include “officer[s]” and “employee[s]” of the Senate, not just members.⁴ Further, in addition to clarifying language, the Padilla amendment added a “sense of the Senate” as follows:

It is the sense of the Senate that the House of Representatives, executive branch, and judicial branch should establish restrictions similar to those under section 1 relating to participation in prediction markets.⁵

While congressional scrutiny will likely focus on insider information or inappropriate influence over outcomes for financial benefit, the rule itself does not link the prohibition to any insider information or other attempt to influence or affect an outcome, emphasizing how seriously the Senate takes this issue. 

Consider the following hypothetical: A legislative aide in a senator’s personal office is an avid professional football fan and occasionally makes predictive bets on various outcomes during games, including what the aide thinks will be the next play or which team will win. This aide has no insider information garnered from the Senate on whether the next play will be a touchdown. The aide has no insights derived from any briefings – classified or otherwise – on whether one team will win or lose. Would the new rule prohibit the aide from placing these bets?

This new rule signals Congress’s focus on further investigations, oversight and legislation over prediction markets and those who place predictive bets. 

II. What is the Executive Branch doing? 

The Executive Branch is already moving ahead with increasing vigor. According to reporting, on March 24, 2026, the White House Office of Management and Budget sent an email to staff warning them against using nonpublic government information to place wagers on online prediction markets.⁶ This appears to have been prompted by news of prediction market accounts earning more than $600,000 by correctly betting on the timing of the Iranian ceasefire.⁷

Federal prosecutors have not been shy in enforcing federal statutes prohibiting the use of nonpublic information to trade on prediction markets. On April 23, 2026, a US Army soldier was charged with using nonpublic government information – which was also, in his case, classified – to earn more than $400,000 by betting on the timing of the US capture of former Venezuelan President Nicholas Maduro.⁸

These two very recent situations, in addition to an unpredictable regulatory environment, highlight the growing risks, legal and reputational, created by the rise of prediction markets. Prediction market platform operators and users, as well as companies and organizations whose information is susceptible to abuse – like sports teams and leagues, government contractors, and financial services companies – might want to carefully consider these risks. 

III. What’s next for the private sector? 

The private sector can expect heightened congressional activity should the Democrats take over one or both houses. Investigating, overseeing and legislating prediction market activity fits squarely with the Democrats’ anti-corruption and consumer protection priorities and is gaining traction with members who are already sending letters or highlighting the issue during hearings – even those regarding unrelated topics. 

For example, on April 30, 2026, Senator Elizabeth Warren (D-MA) used her time during a Senate Armed Services Committee hearing regarding the Fiscal Year 2027 Department of Defense budget request to highlight issues surrounding prediction markets.⁹

The private sector would benefit from taking these actions seriously. If Democrats were to retake the House and/or Senate, multiple committees – Oversight, Financial Services, Agriculture, Judiciary – could launch investigations into what they deem abuses of prediction market platforms, including insider trading. As is true for other issues, these committees would likely turn to the private sector for documents and testimony rather than relying on Executive Branch cooperation with oversight requests. Responding to such requests could take months and negatively impact businesses. 

This tactic was recently exemplified by a May 11 letter from Representative Chris Pappas (D-NH) and six other Democratic members of Congress to Oversight Committee Chairman James Comer (R-KY) requesting an investigation of predictive markets, including subpoenaing “internal records” to identify individual traders.¹⁰

Congress does not act in a vacuum, however. Many state attorneys general (AGs) have already begun the process of enforcing their own laws and regulations.¹¹ Congress’s power to gather information, which is not judicially supervised, can reach materials that AGs would not be able to obtain through discovery. This incentivizes AGs to not only cooperate with Congress but also coordinate with it, which can lead to significant ramifications for the private sector in the courts. 

IV. What to do? 

As an organization, you may aim to develop and maintain policies, plans and procedures governing the acceptable use of confidential information, train employees and monitor compliance. 

You may also want to consider engaging with members of Congress and congressional staff to help educate them on what you are doing to manage the risks created by prediction markets, especially if you are in an industry, like sports, that has experienced high-profile abuse of insider information, if you have access to government information or if you are in the financial services sector. 

If you operate a prediction market, consider not only preparing for potential congressional action in this space – be it additional legislation or investigations – but also seizing the narrative. Further, it may be beneficial to leverage growing public interest to educate members and staff, shape the public perception and establish strong relationships across Congress. 

__________

If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.

_{1 A resolution amending rule XXXVII of the Standing Rules of the Senate to prohibit Senators from trading on prediction markets, S. Res. 708, 119^th Cong. (2026).}

_{2 Amending the Rules of the House of Representatives to prohibit Members of the House from entering into certain agreements, contracts, or transactions with respect to prediction markets, H. Res. 1263, 119^th Cong. (2026).}

_{3 S. Res. 708, supra n. 1.}

_{4 S. Amndt. 5442 to S. Res. 708, 119^th Cong. (2026).}

_5 Id. 

_{6 Phillip Wegmann, “White House Warns Staff Not to Place Bets on Prediction Markets Amid Iran War,” The Wall Street Journal (Apr. 9, 2026).}

_7 Id.

_{8 Press Release, US Dept. of Justice, “US Soldier Charged With Using Classified Information To Profit From Prediction Market Bets” (Apr. 23, 2026).} 

_{9 To receive testimony on the Department of Defense budget request for Fiscal Year 2027 and the Future Years Defense Program: Hearing Before the S. Comm. on Armed Servs., 119^th Cong. (2026) (questions of Hon. Elizabeth Warren).}

_{10 Letter from Hon. Chris Pappas et al. to Hon. James Comer, Chairman, H. Comm. on Oversight and Govt. Reform (May 11, 2026).}

_{11 Press Release, N.Y. Att’y Gen., “Attorney General James Joins Bipartisan Coalition Defending States’ Gambling Laws Against Prediction Markets” (Apr. 24, 2026).}