The U.S. Congress is preparing a strike against prediction markets: a new bill bans betting for lawmakers
A serious conflict is brewing in American politics with the rapidly growing prediction market industry. Republican Brian Steil of Wisconsin, who chairs the House Administration Committee, has introduced the Stop Lawmakers from Predicting Act. The bill directly prohibits members of Congress, their spouses, and minor children from betting on political events, government actions, and voting outcomes using platforms like Kalshi and Polymarket.
Steil's initiative is a direct continuation of his own Stop Insider Trading Act, which was approved by the committee as early as January 14. Essentially, the new law aims to close a loophole through which lawmakers with access to confidential information could gain financial benefits from prediction markets. "Americans should be confident that their congressman is not profiting from insider information. Lawmakers should write laws, not bet on their outcomes," Steil stated.
What exactly the bill prohibits
The ban covers bets on specific government decisions and political events. Violators face a significant fine — $2,000 or 10% of the bet amount, whichever is greater. Any profits obtained from such transactions must be fully returned. Notably, it will be impossible to pay the fine using official expenses, Senate funds, or political donations. Those who resign without settling the debt may be referred to the U.S. Department of Justice for civil action. An important nuance: the law does not affect non-political bets, such as those on sports.
Platforms and Congress prepare for new rules
Steil's bill is just part of a broader campaign to tighten control. In March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced their own proposal — the Public Integrity in Financial Prediction Markets Act, aimed at combating trading of confidential information on any platform. The House of Representatives also has its own counterpart, the PREDICT Act, with similar measures for the families of officials. Earlier, the Senate separately banned prediction market bets for senators and their staff.
Notably, the market operators themselves are aware of the risks. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket, in turn, has integrated Chainalysis and is building an on-chain monitoring system.
Cryptalist Analysis: This wave of regulation is a natural stage in the industry's maturation. Prediction markets, especially those on the blockchain, have demonstrated their power but have also revealed fundamental risks related to insider trading. However, if the ban is adopted in its current wording, it could seriously undermine the liquidity of political contracts. The question is whether lawmakers can separate the wheat from the chaff without destroying the innovative component of this sector.