Senators demand guardrails on drug approval betting markets

Senators target drug betting markets

Democratic Sens. Angela Alsobrooks and Ron Wyden pressed the Department of Health and Human Services to mitigate risks from prediction markets tied to clinical trials and FDA approvals.

The senators' core concern

Alsobrooks and Wyden worry the markets could alter patient thinking when deciding whether to participate in trials and raise potential insider trading risks from researchers and regulators with nonpublic information.

What the senators wrote

The senators stated: "Allowing individuals to bet on the success of these trials and drugs undermines the scientific process, creates perverse incentives for researchers, harms trial participants, and could lead to dangerous medical outcomes for…

“Allowing individuals to bet on the success of these trials and drugs undermines the scientific process, creates perverse incentives for researchers, harms trial participants, and could lead to dangerous medical outcomes for untold numbers of Americans.”

What HHS must provide

The senators requested HHS provide all internal communication regarding staff participation in prediction markets, communication with prediction market platforms and the Commodity Futures Trading Commission, and any internal analyses on market impacts.

Kalshi's defense and guardrails

Kalshi launched related markets in July and said it put guardrails in place, including only allowing markets for late-stage trials and requiring employee verification technology for all traders participating in the markets.

Kalshi's rationale for the markets

Kalshi CEO Tarek Mansour said in July: "Drug development is one of the most important and most information-constrained industries on earth.Surfacing information is what Kalshi is for, and we are committed to doing it right."

“Drug development is one of the most important and most information-constrained industries on earth. Surfacing information is what Kalshi is for, and we are committed to doing it right.”