Senators Press HHS Over Prediction Markets Betting on Drug Trials and FDA Approvals

Event contracts tied to clinical drug trials and Food and Drug Administration approval decisions are under scrutiny from two Democratic senators, who outlined their concerns in a letter first obtained by CNBC.

In a Wednesday letter to Department of Health and Human Services Secretary Robert F. Kennedy Jr., Sen. Angela Alsobrooks of Maryland and Sen. Ron Wyden of Oregon pressed the department on what steps it has taken to address risks tied to the markets.

“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,” the senators wrote.

Alsobrooks and Wyden echoed warnings from some medical professionals that wagering on trial outcomes could influence a patient’s decision to enroll, and they flagged the potential for insider trading by researchers and regulators with access to nonpublic information.

Request for records

The senators asked HHS to turn over all internal communications concerning staff involvement in prediction markets linked to matters under the department’s jurisdiction. They also sought records of any exchanges between the department and the trading platforms themselves, the Commodity Futures Trading Commission, which oversees event contracts, and any internal assessments of how the markets could affect the drug development process.

“HHS, FDA, and [the National Institutes of Health] must uphold the integrity of the drug development process and maintain public trust in the public health by putting essential guardrails in place to prevent individuals profiting on the success and approval of drugs that the American people depend on,” Alsobrooks and Wyden said in the letter.

Both Kalshi and Polymarket, the two leading prediction market platforms, offer the contracts, though Polymarket’s are available only on its international exchange, which falls outside U.S. regulation.

When Kalshi introduced its markets in July, the company said it had built in safeguards to limit trading risk, including restricting listings to late-stage trials. Kalshi also said it would only post contracts after a trial had finished enrolling participants and would require employee verification technology for everyone trading in the markets.

“Drug development is one of the most important and most information-constrained industries on earth,” Kalshi CEO Tarek Mansour said in July. “The data that determines which drugs advance and which don’t is largely locked away from the people who need it most. Surfacing information is what Kalshi is for, and we are committed to doing it right.”

Kalshi, Polymarket and the Department of Health and Human Services did not immediately respond to CNBC’s requests for comment.

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

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