If you only read one story about prediction markets today, it has to be the piece below and not my newsletter. Tremendous work by NPR’s Bobby Allyn about an investigation into George Santos and prediction markets about who would attend President Trump’s State of the Union address. (YES, THAT GEORGE SANTOS).
I am including intentionally little from the story because you really need to click through and read the whole thing.
DOJ is investigating former congressman George Santos for insider trading on Kalshi (NPR): “What Santos didn’t say was that he had already placed bets on Kalshi that he was not going to appear at the State of the Union address, according to three people with direct knowledge of his trades who were not authorized to speak publicly. They say Santos misled the public and turned a profit based on that deception in the tens of thousands of dollars.”
Santos’ involvement here is maybe the least shocking and also the funniest development in the history of prediction markets. That something fishy was going on was evident in real time…it just wasn’t clear how or if Santos might be involved:
That’s at least three insider trading cases — this one, MrBeast videos and Google search — that have come to light involving markets that have basically no utility to the world beyond gambling/speculation. And there are only insider trading issues related to any of them because a prediction market for the underlying exists.
Is it good that insiders are getting caught? Sure. Do we need to be able to bet on who attends the SOTU address? Absolutely not. It’s another example of a prediction market creating a problem where one didn’t use to exist. You could maybe live with it if there were a great reason for the market to exist in the first place. But there is not.
One final thought: I think there are better uses of DOJ and CFTC resources than having to track down insider trading cases related to silly markets.
📊 The Ticker
For Monday, June 1, at Kalshi:
Volume: $585.8 million
Sports + parlays: 75.2% of volume
Crypto markets: 18.5% of volume
That’s the lowest percentage for sports markets in quite some time.
Trend line for daily volume:
Prediction markets roundup
🚨 The important stuff
Vault: House GOP preps prediction market briefing (Punchbowl, paywall): “The House Financial Services Committee will host a private, Republican-only roundtable on prediction markets Wednesday afternoon, according to an internal event memo we obtained.”
“The sitdown will be a high-stakes event for the prominent prediction market companies as well as the sector’s detractors. Chair French Hill (R-Ark.) told us in April that lawmakers were exploring whether there was ‘a need for any imminent statutory change’ in the federal law around event contracts.”
“On the guest list: Kalshi’s Tarek Mansour, Polymarket’s Neal Kumar, Robinhood’s JB Mackenzie and the American Gaming Association’s Chris Cylke.”
Restrictions on prediction market bets by US troops part of draft defense bill (CNN): “Members of the US military may soon be barred from using prediction markets to bet on global events if a draft defense policy bill passes Congress and becomes law. The proposal comes after a high-profile case where a US special forces soldier is accused of using classified information to place bets tied to the capture of Nicolás Maduro.
“Draft bill text released last week by the House Armed Services Committee includes a requirement that Defense Secretary Pete Hegseth issue regulations banning members of the armed forces and Pentagon civilian employees from trading on prediction markets where the person has relevant ‘nonpublic information’ or ‘may reasonably obtain’ such info. The provision would also require Hegseth to develop a ‘range of punishments’ for violating the rule.”
Polymarket Closes First Institutional Block Trade on a GPU Instrument (press release): Polymarket, the world’s largest prediction market, today announced the first institutional block trade on its DeFi platform. This marks the first time a major institutional player has used a prediction market to take a sizeable position on GPU compute prices, effectively treating AI infrastructure costs as a tradeable financial asset class, supporting the thesis that prediction markets have the ability to function like commodity futures for the AI era, providing companies with real GPU exposure a legitimate venue to hedge their costs. The transaction was a six-figure block trade between FalconX, a leading digital asset prime brokerage, and AneraLabs, a company building the clearinghouse for AI risk. The transaction settled against the Ornn Compute Price Index, a transaction-based benchmark that tracks Nvidia H100 GPU compute rental pricing, developed by Ornn AI Inc. and available on the Bloomberg Terminal.
Nvidia H100 GPUs power the AI economy, and their cost has become one of the most consequential variables in institutional markets today. The Ornn Compute Price Index, the first compute index built exclusively from printed transactions, provides a structured benchmark for that exposure. This transaction marks the first time an institutional participant has used it to execute a prediction market hedge on-chain.
“This transaction highlights the accelerating demand for financial infrastructure in the compute space. We’re proud to collaborate with pioneers like Polymarket to deliver deeper liquidity and clearer price discovery to this crucial, rapidly evolving commodity market,” said Ravi Doshi, Global Co-Head of Markets at FalconX.
This trade represents an embedded hedge executed for a provider on the Anera Exchange, in support of a forward capacity contract for deliverable inference and offset of renewal risk. Polymarket’s on-chain infrastructure and the Ornn Compute Price Index together deliver a direct, transparent venue to price and transfer AI compute risk at institutional scale.
Galaxy Digital opens OTC prediction market trading for institutions, kicks off with $10 million Kalshi trade (The Block): “Galaxy Digital has launched an institutional over-the-counter prediction-market trading desk, giving hedge funds, family offices, and other large investors access to event-driven contracts in sizes and with a level of discretion unavailable through retail interfaces.”
“The firm also executed a $10 million trade with crypto-native hedge fund Arca at launch, taking a position tied to the passage of the Clarity Act on Kalshi, according to a Tuesday announcement.”
Prediction Markets Crushed Sportsbooks. Exchanges Could Be Next. (Barron’s): “Sportsbooks like DraftKings have seen their shares crushed over the past year by prediction markets, which offer futures contracts that closely resemble sports bets. Now prediction markets are expanding beyond those contracts, putting a new industry under pressure: financial exchanges.”
Nick Devor@nickdevor_Exchange stocks have been getting crushed since CFTC approved Kalshi perpetual futures on Friday. Prediction markets knocked sportsbook stocks. Are exchanges next?
5:36 PM · Jun 2, 2026 · 8.8K Views2 Replies · 4 Reposts · 39 LikesWall Street regulator offers staff buyouts (Politico Pro): “Just as Congress weighs handing the Commodity Futures Trading Commission new power over the more than $2 trillion cryptocurrency markets, the agency told some of its workforce late last week that they had until midnight Tuesday to indicate interest in the offer. …”
“The CFTC declined to comment. A person familiar with the offer told POLITICO that it came after a lengthy review of the CFTC’s workforce by Chair Michael Selig. The agency … is seeking to align its staff as it takes on newer-age financial products like the prediction markets and crypto, said the person, who was granted anonymity to speak freely. The person added that the CFTC is expected to hire up to 100 people by the end of the year.
📍 Getting rid of people with institutional knowledge = not great. Adding more people as the CFTC deals with prediction markets and crypto is good. But a hundred doesn’t seem like nearly enough people with everything on the agency’s plate, including becoming the de facto regulator for nationwide sports betting.
CFTC Chairman Mike Selig on CNBC:
⚖️ Legal and regulatory news
Illinois Budget Taxes Fantasy Sports, Prediction Markets (Legal Sports Report): “The budget pulls prediction markets under the Sports Wagering Act’s tax structure by amending the language to include “exchange wager.” It looks to require operators to secure a license with the Illinois Gaming Board. It creates an exchange wager tax of 1.75% per transaction, increasing to 3.5% after a licensee goes past five million exchange wagers.”
Nevada regulators secure temporary shutdown order against Polymarket (SBC Americas): “The NGCB announced on June 1 that Judge Jason Woodbury of the First Judicial District Court for the State of Nevada granted the regulator’s motion for a preliminary injunction against Polymarket.”
“We are very pleased with Judge Woodbury’s ruling and will continue to vigorously enforce Nevada law to safeguard gaming in our state,” said NGCB Chairman Mike Dreitzer.”
📣 Industry news
Kalshi Eyes Perpetual Futures for XRP, Solana, Dogecoin—And These Altcoins (Decrypt): “Kalshi moved swiftly to lock down an emerging market for perpetual futures in the U.S. on Monday, filing to certify a menu of offerings tied to crypto’s leading altcoins.”
“Following the CFTC’s approval of Bitcoin perpetual futures on Friday, the prediction market has begun eyeing derivatives tied to Ethereum, XRP, Solana, Dogecoin, Stellar, Chainlink, Bitcoin Cash, Litecoin, Sui, Shiba Inu, Polkadot, and Hedera, according to a filing.”
📖 Everything else you should know/read
Polymarket Bettors Struggle Over Strategy’s Bitcoin Sale (Bloomberg): “Aggrieved users say that the market’s pre-established rules only required Strategy to sell some Bitcoin by the end of May, pure and simple. Polymarket later chimed in with its own clarification of the rules on Monday afternoon — saying that any announcement by Strategy also had to have occurred by that date.”
This Is What Trumpian Self-Dealing Looks Like (The New Yorker): “The power struggle over regulating crypto and prediction markets offers a window into how the President enriches his family and his wealthy supporters.”
Prediction markets are out of control — Congress must act to ban insider trades now (The Hill): “Some bets should stay between you and your friends — and bets by public officials tasked with stewarding the public interest should not be placed at all. The sheer volume of activity on prediction markets, through which individuals can place bets on the outcome of future events, provides perfect cover for traders seeking to profit on insider information.”
Dimon Sounds Off, Prediction Markets vs. Sports Betting | Bloomberg Crypto:
DraftKings speaks:
After Earnings (from Morning Brew ☕️)@AfterEarnings.@AnnBerry_NYC is joined by Alan Ellingson, CFO of @DraftKings, to discuss how the company is navigating the rising popularity of prediction markets, its new “Super App” designed to let users seamlessly operate across jurisdictions, and how DraftKings is working to maintain2:28 PM · Jun 1, 2026 · 6.98K Views1 Reply · 3 Reposts · 9 LikesChances of U.S.-Iran Peace Deal Plummet on Polymarket (WSJ): “Polymarket traders see it as unlikely that the U.S. and Iran will reach a peace deal or that the Strait of Hormuz will fully reopen this month, a sharp shift from just over a week ago.”
“Traders see a 27% chance of a permanent U.S.-Iran peace deal replacing the countries’ shaky ceasefire by the end of June, according to data from the popular crypto-based prediction market. That’s down from more than 75% on May 23, when President Trump posted on Truth Social that a peace agreement had been ‘largely negotiated.’”
Kalshi Fills a Harberger Triangle With Tequila (Real Clear Markets): “Let me say up front that I like prediction markets. They are a genuinely good technology for two things: aggregating scattered information into a single probability, and letting people lay off risks that are large, correlated with their livelihood, and otherwise nondiversifiable. A festival promoter hedging a hurricane. A farmer hedging a freeze. These are real problems that a liquid market on a well-defined event can actually solve. A bar comping drinks if the Knicks win is not one of those problems. It is a coupon.”
Kalshi preview of the Stanley Cup Final at NHL.com: This is not the first time there has been one of these.
Now that Republican deregulation has taken over everything, gambling sites, which call themselves “trading sites,” have taken over television and sports. Fraud is already rampant. I’d be real careful betting on the NBA finals. Basketball is the easiest sport to shave points.