The U.S. Congress is preparing a ban on betting in Polymarket and Kalshi: A new law against insider trading
A bill titled the Stop Lawmakers from Predicting Act has been introduced in the U.S. Congress, which directly prohibits members of Congress, their spouses, and minor children from betting on political events and government decisions through prediction platforms such as Polymarket and Kalshi.
The document was initiated by Republican Brian Steil, who chairs the House Administration Committee. The main motivation is concern that lawmakers with access to confidential information could use it for financial gain on prediction markets, placing them in a deliberately privileged position compared to ordinary participants.
"Americans should be confident that their congressman is not profiting from insider information. Lawmakers should write laws, not bet on their outcomes," Steil said, commenting on his initiative.
What exactly does the bill prohibit?
The new act expands on the provisions of the Stop Insider Trading Act, which was approved by the committee on January 14. The ban covers bets on specific government decisions, actions of authorities, and outcomes of political events. Violators face a fine of $2,000 or 10% of the bet amount—whichever is greater. All profits obtained are subject to confiscation. It is important to note that paying the fine from official funds, the Senate budget, or political donations will be impossible. In case of non-payment, the case is referred to the U.S. Department of Justice for a civil lawsuit, and this applies even to those who have already resigned.
The law does not affect bets on non-political events, such as sports. This underscores its targeted focus—combating the use of official position specifically in political forecasting.
Parallel initiatives and market reaction
Steil's bill is only part of a broader crackdown. 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 curbing trading of confidential information on any platforms. In the House of Representatives, the PREDICT Act is being simultaneously advanced with similar measures for the families of officials. The Senate had previously, through a separate decision, banned senators and their staff from betting on prediction markets.
Platform operators themselves are also preparing for stricter rules. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from entering the platform. Polymarket, in turn, has integrated Chainalysis and is building an on-chain monitoring system. Whether the final document will be adopted largely depends on agreements between Republicans and Democrats—similar initiatives are underway in both chambers of Congress.
Expert opinion. This wave of bills is a clear signal to the market: regulation of prediction platforms is inevitable, and it will be strict. Polymarket and Kalshi are in the crosshairs not only due to potential manipulation but also because of their growing popularity among the political elite. Investors should consider that any hint of insider activity in this sector could lead to immediate repressive measures from authorities.