In the US, a campaign to ban political betting for members of Congress is gaining momentum: a new bill against insider trading on Kalshi and Polymarket
A serious regulatory storm is brewing in the U.S. Congress, targeting prediction markets. Republican Bryan Steil, who chairs the House Committee on Administration, has introduced the Stop Lawmakers from Predicting Act. This bill directly targets members of Congress, their spouses, and minor children, prohibiting them from betting on political outcomes and government decisions through platforms such as Kalshi and Polymarket.
Steil's initiative is not an isolated attack but part of a systemic effort to combat insider trading based on non-public information. According to the author's intent, lawmakers should be writing laws, not betting on them using their privileged position. Concerns that congressmen could profit from information unavailable to the general public have become a key driver of this bill.
What exactly is prohibited and what are the penalties
The bill expands on the provisions of the Stop Insider Trading Act, which the committee approved on January 14. The ban covers bets related to specific government decisions, actions by authorities, and outcomes of political events. Violators face a significant fine: $2,000 or 10% of the bet amount, whichever is greater. Additionally, any profits obtained must be returned in full.
An important detail: 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 a civil lawsuit. Notably, the law does not affect bets on non-political events, such as sports.
Bipartisan support and platform reactions
This initiative is just one part of a broader trend toward tightening control. In March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced their own bill, the Public Integrity in Financial Prediction Markets Act, aimed at combating trading on non-public information on any platform. Meanwhile, in the House of Representatives, the PREDICT Act is moving forward in parallel, with similar measures for the families of officials. Earlier, the Senate separately banned senators and their staff from betting on prediction markets.
The market operators themselves, aware of the risks, have begun to act proactively. As early as June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket, for its part, has brought in Chainalysis and is building an on-chain monitoring system.
Cryptalist Expert Opinion: Prediction markets are a powerful tool for information aggregation, but their Achilles' heel is vulnerability to insider trading. Lawmakers with access to non-public information can indeed distort market signals. However, a complete ban for this category of individuals is a palliative measure. The question is how to effectively combat insider trading on a global level, not just among congressmen. The crypto industry should closely monitor this development, as it sets a precedent for the future regulation of decentralized prediction platforms.