U.S. lawmakers are preparing a ban on betting through Kalshi and Polymarket: a new law against insider trading.
The regulatory battle surrounding prediction markets in the United States is escalating. Wisconsin Republican and Chairman of the House Committee on Administration, Bryan Steil, has introduced the Stop Lawmakers from Predicting Act. The bill directly prohibits members of Congress, their spouses, and minor children from placing bets on political events and government decisions using platforms like Kalshi and Polymarket.
The primary motivation behind the initiative is the concern that lawmakers with access to confidential information could use it for personal gain in prediction markets. Steil emphasizes: "Americans should be confident that their congressman is not profiting from insider information. Lawmakers should be writing laws, not betting on their outcomes." This is a direct blow to the very principle of prediction markets, where an information advantage is often key to profitability.
What exactly the new bill prohibits
The document expands on the provisions of another bill — the Stop Insider Trading Act, approved by the committee on January 14. The ban applies not only to congressmen themselves but also to their immediate family members. The restrictions cover bets on specific government decisions, actions of authorities, and outcomes of political events. Violators face a fine: $2,000 or 10% of the bet amount (whichever is greater). Illegally obtained profits must be returned. Notably, the fine cannot be paid using official expenses, Senate funds, or political donations. Those who resign without settling their debt may be referred to the U.S. Department of Justice for a civil lawsuit. Importantly, the law does not affect bets on non-political events, such as sports.
Platforms and Congress prepare for new rules
Steil's bill is part of a broader trend toward stricter oversight. Earlier, in March, Senators Young, Slotkin, Curtis, and Schiff introduced their own bill — the Public Integrity in Financial Prediction Markets Act — aimed at combating trading on confidential information across all platforms. There is also a similar House bill, the PREDICT Act. Additionally, the Senate has already separately banned senators and their staff from betting on prediction markets. Whether the final document will be adopted largely depends on agreements between Republicans and Democrats — similar initiatives are moving forward in parallel in both chambers.
Market operators themselves are also preparing for changes. As early as June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket, in turn, has partnered with Chainalysis and is building an on-chain monitoring system.
Analyst comment: This bill is a logical, albeit belated, step. Prediction markets, especially those focused on political topics, are highly vulnerable to manipulation by insiders. If passed, it will not only clean up the market itself but also set a precedent for other countries considering regulation of such platforms. Transparency is the only path to the long-term legitimacy of prediction markets.