Congressmen in the crosshairs: new bill bans political betting via Kalshi and Polymarket
The regulatory guillotine for prediction markets in the US is tightening. This time, lawmakers themselves are in the crosshairs. The Stop Lawmakers from Predicting Act has been introduced in the House of Representatives, initiated by Republican Congressman Bryan Steil, who chairs the Committee on House Administration. The bill directly prohibits members of Congress, their spouses, and minor children from betting on political outcomes and government decisions using platforms such as Kalshi and Polymarket.
Essence of the Ban and Motivation
The main argument of the bill's author is the inadmissibility of profiting from insider information. Lawmakers have access to data unavailable to ordinary market participants, creating a glaring conflict of interest. "Americans should be confident that their congressman is not profiting from insider information. Lawmakers should write laws, not bet on their outcomes," is Steil's position.
The bill is a logical continuation of the Stop Insider Trading Act, approved by the committee on January 14. It not only duplicates but also expands measures previously introduced by the Senate, which has already banned senators and their staff from trading on prediction markets.
Penalties and Exceptions
Violators face a fine of $2,000 or 10% of the bet amount—whichever is greater. Any profits obtained must be returned. Notably, it will be impossible to pay the fine using official funds, Senate funds, or political donations. Moreover, unpaid fines may be referred to the US Department of Justice for civil action, even if the congressman resigns.
An important nuance: the law does not affect bets on non-political events, such as sports. This means platforms like Kalshi and Polymarket retain some room to maneuver, but under strict control.
Industry Reaction and Parallel Initiatives
Prediction markets are already preparing for new rules. In June, Kalshi launched a risk assessment and employment verification system to screen out insiders. Polymarket, in turn, has integrated Chainalysis for on-chain monitoring. It is clear that operators recognize the inevitability of tightening.
In addition to Steil's bill, the Senate is advancing the Public Integrity in Financial Prediction Markets Act, and the House of Representatives is promoting the PREDICT Act. Both aim to combat trading on non-public information across all platforms. The bipartisan consensus on this issue suggests that the era of unregulated political betting in the US is coming to an end.
Analyst Comment: Regulatory pressure on prediction markets is not just a fight against insider trading but a systemic blow to the entire decentralized financial ecosystem. If the bill is passed, it will create a dangerous precedent that could be extended to other DeFi segments. Investors should closely monitor developments: volatility on Polymarket and Kalshi could sharply increase amid uncertainty.