There’s a moment in every emerging industry’s lifecycle when the reformers show up. Not the regulators who want to slow you down, or the critics who want to shut you down. The reformers. The ones who say: we’re not against this thing existing, we’re just against the wrong people profiting from it.
That moment has arrived for prediction markets. And it came from Vermont.
Becca Goodlander’s Quiet Legislative Salvo
Representative Becca Goodlander, a Democrat representing Hartland, has introduced legislation that would bar senior government officials from trading individual stocks and — here’s the kicker — placing bets on prediction markets. The bill targets the executive branch’s highest echelons, the people with access to information that could move markets before anyone else knows what’s coming.
On the surface, this looks like standard good-government housekeeping. Congressional stock trading has been a perennial scandal, the kind of story that generates outrage every few years before Congress decides, once again, that it would rather not police itself. But Goodlander’s bill does something different. It explicitly names prediction markets as a category requiring prohibition alongside equities.
That’s not an accident. And it’s not a throwaway line in a broad ethics package.
The inclusion signals that at least some lawmakers now view prediction markets as carrying the same corruption potential as traditional securities. Which means the industry’s pitch — that these platforms are fundamentally different from Wall Street gambling, that they serve a public information function rather than a private enrichment one — isn’t landing with everyone.
The Insider Problem Nobody Wants to Acknowledge
Here’s the uncomfortable truth prediction market advocates don’t love discussing: the very features that make these platforms valuable also make them extraordinarily tempting for insiders.
A senior Treasury official who knows an inflation announcement will come in hot could place a bet hours before the public data release. A White House staffer aware that a major trade negotiation has collapsed could short the probability of a deal closing. A Pentagon analyst with advance knowledge of troop movements could wager on geopolitical outcomes that hinge on information they’ve seen in classified briefings.
None of this requires anything as crude as leaking documents. It just requires placing a bet. And unlike stock trades, which at least face some disclosure requirements and regulatory scrutiny, prediction market regulation remains fragmented across a patchwork of state and federal authorities who can’t agree on what they’re even looking at.
Kalshi operates under CFTC oversight as a designated contract market. Polymarket exists in a more complicated legal gray zone, accessible primarily to non-U.S. users though plenty of American traders find workarounds. The regulatory infrastructure that would catch a government official betting on outcomes they could influence simply doesn’t exist in any robust form.
Goodlander’s bill represents an attempt to solve the problem at its source: don’t let them place the bets in the first place.
Why Vermont Might Actually Matter
It would be easy to dismiss this as a single state legislator filing a bill that will die in committee, one more piece of noise in an increasingly loud policy conversation. But Vermont has a history of punching above its weight on ethics legislation. And Goodlander’s framing — grouping prediction markets with stock trading rather than with fantasy sports or casino gambling — could influence how other jurisdictions think about the issue.
The timing matters too. We’re watching a state-by-state crackdown unfold across the country, with Minnesota and others moving to restrict or ban prediction market access. But those efforts have largely focused on consumer protection and gambling concerns. Goodlander’s approach is different. It’s about corruption, about the specific risk that people with material non-public information will use prediction markets the same way they’ve historically used stock options.
This reframing could prove more durable than the gambling angle. Americans have complicated feelings about betting. They have much simpler feelings about government officials getting rich off information the rest of us don’t have.
The political appeal is obvious. Everyone hates insider trading. Everyone wants to believe their government isn’t rigged for the people running it. A prohibition that captures both stocks and prediction markets packages well — it says we’re closing loopholes, not targeting an industry.
The Industry’s Uncomfortable Silence
What’s notable is how quiet the major prediction market players have been about this category of risk. Kalshi has spent considerable resources on K Street lobbying operations, building relationships with lawmakers and making the case that prediction markets deserve regulatory clarity and mainstream acceptance. Polymarket has attracted serious institutional backing, including from the NYSE’s parent company, signaling that Wall Street sees these platforms as legitimate financial infrastructure rather than gambling curiosities.
But neither has gotten out ahead of the insider trading question in any meaningful way. The industry’s pitch has focused on information aggregation, on price discovery, on the social utility of having markets that tell you what’s actually likely to happen rather than what pundits hope will happen. That’s a compelling story. It also sidesteps the question of who’s providing that information and whether they’re profiting improperly from it.
Goodlander’s bill forces the issue. If you’re a platform operator watching this, you have to start thinking about how you’d detect officials wagering on outcomes they could influence. You have to think about KYC requirements that go beyond anti-money-laundering basics. You have to think about whether your market design itself creates incentive structures that invite the kind of behavior reformers want to prevent.
What Comes Next
The bill’s prospects in the current Vermont legislative session remain unclear. Ethics legislation often moves slowly, requiring coalition-building that spans party lines and interest groups that don’t naturally align. But the concept has legs.
Congressional attention to prediction markets has intensified dramatically. Lawmakers are asking questions about everything from market manipulation to the appropriateness of betting on human suffering. The CFTC continues wrestling with how to regulate an industry that doesn’t fit neatly into existing statutory categories. State attorneys general are filing enforcement actions that could reshape who can operate where.
Into this chaos comes a simple, politically attractive idea: don’t let government insiders participate. The details will get messy — defining “senior official,” determining which markets count, establishing enforcement mechanisms — but the principle has the kind of broad appeal that tends to survive legislative sausage-making.
For prediction market operators, the strategic question is whether to engage proactively or hope the issue fades. History suggests the latter rarely works. The industries that thrive under regulatory scrutiny are typically the ones that shape the rules rather than react to them. That might mean self-imposed restrictions on government employee accounts. It might mean voluntary disclosure frameworks. It might mean lobbying for federal standards that preempt a patchwork of conflicting state rules.
What it probably can’t mean is pretending the problem doesn’t exist. Because Becca Goodlander just put it on the record. And once something’s on the record, it has a way of staying there.