Two U.S. senators have formally demanded that Health and Human Services Secretary Robert F. Kennedy Jr. explain what his department is doing about prediction markets that let traders bet on clinical drug trials and FDA approval decisions.

Sens. Angela Alsobrooks, a Maryland Democrat, and Ron Wyden, an Oregon Democrat, sent the letter on Wednesday, CNBC reported. The request escalates a confrontation between Washington and the fast-growing event-contract industry over one of its most sensitive product categories: pharmaceutical outcomes.

What do the senators want from HHS?

The lawmakers asked for a broad set of records. Their demands include:

• Every internal HHS message about department employees participating in prediction markets tied to issues under HHS authority
• Communications between HHS and the trading platforms themselves
• Communications between HHS and the Commodity Futures Trading Commission, the federal regulator of event contracts
• Any internal HHS analyses of the markets' potential impact

The senators framed the stakes in blunt terms. Allowing bets on trials and drugs, they wrote, "undermines the scientific process, creates perverse incentives for researchers, harms trial participants, and could lead to dangerous medical outcomes for untold numbers of Americans."

They also echoed concerns from healthcare professionals that active trading could distort patient decisions about whether to enroll in a study. A second risk they flagged: insiders with non-public knowledge — researchers and regulators among them — could trade on that information before the public learns it.

"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," the senators wrote, according to CNBC.

Who offers these markets?

Both Kalshi and Polymarket, the two leading prediction market platforms, list drug-related contracts. Polymarket offers them through its international exchange, which sits outside the reach of U.S. regulators. The structure means American oversight covers only part of the trading activity the senators are targeting.

Kalshi launched its drug-related markets in July. The company said it built in safeguards to curb trading risk. Its measures include:

• Limiting markets to late-stage trials only
• Waiting to list contracts until a study has finished enrolling participants
• Screening every trader through employee verification technology

Kalshi CEO Tarek Mansour defended the product at launch in July. "Drug development is one of the most important and most information-constrained industries on earth," he said, according to CNBC.

What are regulators already doing?

Enforcement scrutiny of prediction markets is already underway on two fronts. The Securities and Exchange Commission is monitoring the platforms for insider trading and market manipulation, SEC Enforcement Director David Woodcock has said. Enforcement activity is coming "in the future, for sure," Woodcock added.

The CFTC holds primary oversight of Kalshi and the U.S. arm of Polymarket. This year the commission has pursued several cases involving prediction markets. One ended in a settlement with former Rep. George Santos over allegations that he manipulated Kalshi wagers.

Both Kalshi and Polymarket have said they do not condone insider trading and alert regulators to suspicious behavior they detect on their platforms.

The senators' letter now puts HHS on record as the third federal institution drawn into the question — and shifts the debate from market conduct to the integrity of American drug development itself.