📊 Senators say Polymarket can't kill people

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Six Senate Democrats sent a letter to CFTC Chairman Michael Selig this week demanding that the agency explicitly prohibit prediction market contracts tied to death, war, terrorism, and assassination, arguing that platforms like Polymarket have been openly listing markets that federal law already bans. The letter, led by Adam Schiff of California and co-signed by Richard Blumenthal, Cory Booker, Tim Kaine, Catherine Cortez Masto, and Jacky Rosen, urged Selig to "clearly reiterate that the CFTC will categorically prohibit any contract that resolves upon or closely correlates to an individual's death." The CFTC did not respond to requests for comment.

The senators laid out three recent Polymarket contracts to make their case. The first was a market on whether the Artemis II NASA spacecraft would explode during launch, which Polymarket eventually pulled after public backlash. The senators argued the market "directly correlated with crewmember death" and could have incentivized sabotage. Polymarket pushed back, saying the contract was about a booster-stage malfunction, not crew safety, which is exactly the kind of narrow framing that tends to infuriate regulators.

The second example was harder to dismiss. A Polymarket user opened an account in late December, placed bets on just four events across roughly a week, all tied to Venezuelan President Nicolás Maduro being removed from power, and walked away with more than $400,000 in profit on a $32,000 stake. Maduro was taken into custody on January 3rd. The account was flagged on social media for potential insider trading before U.S. military action against Venezuela became public knowledge. The senators called it a textbook example of the national security risks created when financial rewards are tied to destabilizing geopolitical events.

The third example involved a Polymarket contract on whether Russian forces would capture the Ukrainian town of Myrnohad by November 15, 2025. The contract resolved in favor of "yes" after a staffer at the Institute for the Study of War edited the organization's battlefield map to show Russian control of a key intersection in the town, despite no evidence that Russia had actually advanced there. After Polymarket paid out, the edit was quietly removed. Individuals who bet yes made returns of up to 33,000 percent. The senators described it as a contract that "unambiguously involves, relates to, or references war," and noted that the incident illustrated exactly how financial incentives attached to real-world conflict outcomes can distort the information people rely on to understand what's actually happening.

The letter arrives at an awkward moment for Selig, who has been aggressively positioning the CFTC as the sole authority over prediction markets while state regulators try to shut them down. Last week, the agency filed an amicus brief in the Ninth Circuit arguing that states have no jurisdiction over commodity derivatives markets. Selig published an op-ed in the Wall Street Journal declaring that the CFTC would "no longer sit idly by" while states tried to regulate platforms like Kalshi and Polymarket. The senators, in their letter, accused Selig of steering the commission "in a direction that is at odds with the intent of the Commodity Exchange Act, respect for state law, and tribal sovereignty," and noted that his current posture contradicts testimony he gave before the Senate Agriculture Committee in November where he declined to prejudge whether prediction market contracts constituted gaming.

What makes the letter politically pointed is the context surrounding Polymarket's U.S. reentry. Donald Trump Jr. joined Polymarket's advisory board after his venture capital firm made a strategic investment in the company. Days later, the CFTC greenlit Polymarket's bid to enter the U.S. market. The senators did not name that timeline explicitly, but they did not have to. Asking the chairman to enforce the law against a platform that the administration just welcomed back is a pointed way of asking whether the regulatory posture here is about legal principle or something else.

Selig is in the position of defending an industry in court while being asked by members of Congress to crack down on it at the same time. The CFTC's argument is that federal jurisdiction over these markets is legally settled and states need to back off. The senators' argument is that federal jurisdiction comes with federal obligations, and the most basic of those is not allowing markets that Congress already decided were contrary to the public interest. Neither side is wrong about the framework. They are just drawing very different conclusions about what the regulator in charge of enforcement should actually be doing with it.

X forced Kalshi's hand on Monday night, when the prediction market platform quietly stripped affiliate badges from every partnered account on the social platform. The move came days after X updated its paid partnerships policy to ban promotional deals with accounts posting gambling and sports betting content. X's head of product Nikita Bier rubbed salt in the wound with a meme showing a utopian society captioned, "The world without prediction market spam on X." Bier also personally confronted individual accounts, warning them about undisclosed paid promotions and threatening suspensions.

Kalshi framed the decision as voluntary. "We've decided to remove Kalshi badges," a spokesperson told Front Office Sports. "People loved the badges and it was a fun way to engage the community, but it became too difficult to police, and people often confused badged accounts with Kalshi-endorsed messages." That last part is doing a lot of work. The affiliate programs have been a persistent liability for both Kalshi and Polymarket, with badged accounts posting fake news and racist content that got traced back to the platforms. Calling them "bumper stickers" only goes so far when the bumper sticker is on a car spreading misinformation.

Polymarket affiliates still had their badges as of Monday night, which creates an interesting wrinkle. Polymarket signed a deal last June to become X's "official prediction market partner," integrating prediction data directly into the platform. Whether that partnership shields Polymarket from the same enforcement Kalshi faced, or whether X is simply working through its list, remains to be seen. Leaked screenshots from Polymarket's private affiliate chat show Growth Lead William LeGate already ordering affiliates to pull referral links from their bios and stop posting them on X, suggesting they're expecting the same treatment.

The affiliate crackdown lands at a messy moment for the industry. Multiple state regulators have active lawsuits challenging whether sports event contracts are just sports betting by another name. Last week, newly confirmed CFTC Chairman Mike Selig made the agency's position unmistakable, filing an amicus brief in the Crypto.com case before the Ninth Circuit arguing that prediction markets fall exclusively under federal jurisdiction. "To those who seek to challenge our authority in this space," Selig said in a video, "let me be clear: we will see you in court."

Losing the affiliate playbook on X is more than a marketing inconvenience. These badge programs were the primary growth engine for both Kalshi and Polymarket, turning power users into paid evangelists across the platform where most prediction market discourse actually happens. With X shutting that channel down and state regulators closing in from the other side, the industry's two biggest consumer-facing platforms are losing their cheapest customer acquisition tool right when they need it most. The CFTC may be willing to go to bat for prediction markets in court, but it won't be helping them find new traders on social media.

Kalshi blocked major Democratic donor Stephen Cloobeck from betting on the California governor's race this weekend after he tried to place about $3,000 in trades supporting Rep. Eric Swalwell, a close friend whose candidacy Cloobeck has backed since dropping out of the race himself in November. The platform told him he was "restricted from trading this market" but offered no explanation. Kalshi's rules bar candidates, campaign staff, and anyone holding "material, non-public information" from election trading, but Cloobeck isn't any of those things. His only formal tie to Swalwell is a max contribution of $39,200 and a public endorsement.

The messier detail is what happened back in October, when Cloobeck was still running. He shared a screenshot showing Kalshi let him bet roughly $4,750 on himself winning the election, a direct violation of the platform's own rules. Kalshi's head of enforcement has said publicly that a candidate trading on their own race "triggers disciplinary action" and potential permanent suspension. Spokesperson Elisabeth Diana declined to explain why the platform didn't catch Cloobeck until months after he left the race and started betting on someone else.

The California governor's market has pulled in more than $3 million in volume on Kalshi, and Swalwell has been outperforming rivals on both Kalshi and Polymarket for months, regularly promoting his prediction market numbers on social media as a momentum signal. Rival candidate Antonio Villaraigosa used the moment to reiterate his call for state officials to shut down Californians' access to prediction markets entirely.

This is exactly the scenario that makes regulators nervous. Letting a candidate bet on himself for months, then blocking a donor with no clear policy basis, looks like compliance infrastructure still catching up to the product. For an industry trying to earn regulatory trust state by state, every incident like this hands ammunition to the people who want to ban these platforms outright.

📈 Biggest swing: “US seizes an Iran-linked oil tanker by Feb 28?” moved 32% → 98% (Polymarket)

💰 Top earner: @SquareSally - $68,469 24H Profit (Kalshi)

🤔 Weirdest market: “Larry Wheels divorce by June 30” (Polymarket)