Senators demand answers on prediction markets betting on drug trials and FDA approvals

Two Democratic senators want answers from the Department of Health and Human Services about prediction markets that let people wager on clinical drug trials and FDA approvals. Sen. Angela Alsobrooks of Maryland and Sen. Ron Wyden of Oregon sent a Wednesday letter to HHS Secretary Robert F. Kennedy Jr., obtained first by CNBC, asking what the department has done to rein in the risks. They want a full accounting of how the markets could touch everything from trial integrity to insider trading.

The senators didn't mince words. In the letter, they wrote that letting people bet on whether trials and drugs succeed undermines the scientific process, creates perverse incentives for researchers, harms trial participants and could lead to dangerous medical outcomes for Americans. They echoed concerns from healthcare professionals who worry the markets could sway patients deciding whether to enroll in a trial, and flagged the chance that researchers or regulators with access to nonpublic information could trade on it.

The letter asks HHS to hand over all internal communication about staff participation in prediction markets tied to department matters. Alsobrooks and Wyden also want correspondence between HHS and the prediction market platforms, the Commodity Futures Trading Commission — which regulates event contracts — and any internal analyses of the markets' potential impact. Their bottom line, as they put it, is that HHS, the FDA and the National Institutes of Health must uphold the integrity of drug development and keep public trust by installing guardrails so nobody profits on the success and approval of drugs Americans depend on.

Both major prediction platforms offer these contracts. Kalshi does so in the U.S., while Polymarket's versions live only on its international exchange, which isn't regulated domestically. When Kalshi rolled out the markets in July, it said it had built in safeguards: only late-stage trials, contracts listed only after a trial finished enrollment, and employee verification technology for everyone trading them.

Kalshi CEO Tarek Mansour defended the push at launch, saying drug development is one of the most information-constrained industries on earth and that the data deciding which drugs advance stays locked away from the people who need it. Surfacing that information is what Kalshi is for, he said, and the company is committed to doing it right.

Worth noting: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.