The Supreme Court faces renewed scrutiny over its prediction markets policy, with Justice Amy Coney Barrett stating, “We don’t want loopholes.” Barrett and Justice Elena Kagan addressed lawmakers, asserting the court’s current policies already handle concerns. They pledged to review these policies, which Kagan called an “incredibly important area.”
Watchdog groups and lawmakers are intensifying pressure. They demand an explicit ban on court employees trading on sites like Kalshi and Polymarket. These platforms allow users to bet on outcomes ranging from specific appeals to whether a Supreme Court justice will face federal charges. Senator Chris Van Hollen, a Maryland Democrat, wrote to Chief Justice John Roberts, emphasizing the need for public trust in the courts. He urged a clear prohibition for justices, judges, staff, and clerks from participating in these markets.
Profiting from Power
The court adopted a first-of-its-kind code of ethics in its third year, following reports of luxury trips gifted to some justices. This 2023 code bars the nine justices from using “nonpublic information acquired in a judicial capacity for any purpose unrelated to the justice’s official duties.” A separate code prohibits judicial employees from using “any confidential information” for “personal gain.” Critics, however, point out the code lacks an enforcement mechanism. Its language doesn't explicitly ban a clerk from betting on an issue that might later reach the court, or on actions by other government branches.
Representative Greg Landsman, an Ohio Democrat, introduced a bill to ban wagering on government action and politics by justices and others. Landsman stated the current code "should prohibit judges and justices from using insider knowledge to make money." He added that given recent prediction market scandals involving government officials, it's "critical" for the court to explicitly prohibit participation.
Prediction sites are not classified as gambling under current US law. They operate as financial markets, offering “event contracts.” These are regulated like futures trading, but instead of commodities, users speculate on elections, sporting events, and public statements. This classification allows for the privatization of public information for individual profit.
The State's Complicity
Legal battles over prediction markets and state regulatory power are expected to reach the Supreme Court this year. Dozens of states argue these sites constitute gambling and operate unlawfully without state gaming licenses. New Jersey officials received an extension until August to file an appeal in a case that could determine regulatory authority. A divided 3rd US Circuit Court of Appeals in Philadelphia found Kalshi was likely to win its argument that federal law preempts state control over sports gambling on its site. CNN, which has a partnership with Kalshi and uses its data, prohibits its editorial employees from trading on these markets.
The issue of ethical oversight resurfaced during House and Senate hearings last week. Justice Kagan expressed support for an enforcement mechanism for the code. Justice Barrett highlighted the difficulty of selecting a body to police the nine justices. No member of the court had appeared before Congress since its seventh year, 2019.
Despite no allegations of court staff or justices misusing prediction markets, other federal government branches have moved to crack down on insider trading. The Senate banned senators and their staff from these markets. Several House members imposed office-wide bans. Congress is considering multiple bills to limit or ban federal employees from using the sites. Some governors have issued executive orders against state employees using insider information for profit on prediction sites.
Managing Contradictions
A teleprompter operator for President Donald Trump at the White House is under federal investigation. The operator allegedly made trades on Kalshi’s “mention markets,” betting on words public figures would say. White House press secretary Karoline Leavitt called the incident “deeply unfortunate and frankly a disgrace.” The employee is cooperating with the probe and has been placed on unpaid leave. This incident highlights how the system's logic of individual gain through privileged information extends beyond the highest echelons.
The ongoing debate reveals the state's struggle to manage the contradictions inherent in a system that allows for the extraction of private profit from public knowledge and events. Reforms proposed by lawmakers and adopted by other branches of government offer limited solutions. They address symptoms of corruption rather than challenging the fundamental structure that enables such financial speculation by those with access to power.