U.S. lawmakers are preparing a ban on betting through Polymarket and Kalshi: a new blow to prediction markets
American lawmakers may lose access to rapidly growing prediction markets. A bill called the Stop Lawmakers from Predicting Act has been introduced in Congress, which directly prohibits members of the House of Representatives, their spouses, and minor children from betting on political outcomes and government decisions using platforms such as Kalshi and Polymarket.
The bill's sponsor is House Administration Committee Chairman Bryan Steil, a Republican from Wisconsin. The main motivation is to prevent a situation where lawmakers could gain financial benefits by using insider information unavailable to ordinary market participants. "Americans should be confident that their congressman is not profiting from non-public data. Lawmakers' job is to write laws, not bet on them," Steil stated.
What exactly does the new law prohibit and what are the consequences?
The bill builds on provisions of the earlier Stop Insider Trading Act, approved by the committee on January 14. The ban covers bets related to specific government decisions, actions by authorities, and outcomes of political events. Violations carry a fine of $2,000 or 10% of the bet amount — whichever is greater. Any profits obtained as a result of the violation must be fully returned.
An important detail: the fine cannot be paid using official expenses, Senate funds, or political donations. Those who resign or end their careers without settling the debt may be referred to the U.S. Department of Justice for a civil lawsuit. The law does not affect bets on non-political events — such as sports.
Prediction markets in the crosshairs: parallel initiatives and platform actions
Steil's initiative is just part of a broader campaign to tighten control. As early as 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 insider trading on any platform. In the House, the PREDICT Act is moving forward simultaneously with similar measures for officials' families. Previously, the Senate separately banned senators and their staff from betting on prediction markets.
Platform operators themselves are also preparing for new realities. In June, Kalshi implemented a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket, in turn, integrated Chainalysis analytics and is building an online monitoring system to detect suspicious activity.
Analyst comment: This bill is a logical continuation of the trend toward regulating prediction markets, which in recent years have become a powerful tool not only for speculation but also for gathering data on the probability of events. However, from my perspective, the ban on congressmen is just the tip of the iceberg. A much more serious challenge for the industry will be the potential expansion of such restrictions to all government employees and, possibly, to broad circles of investors. This could significantly reduce the liquidity and informational value of platforms like Polymarket and Kalshi, undermining their main advantage — the speed and accuracy of aggregating market expectations.