The U.S. Congress is preparing a ban on betting through Kalshi and Polymarket: the fight against insider trading is gaining momentum.
American lawmakers may soon lose access to prediction markets such as Kalshi and Polymarket. 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 betting on political events and government decisions using these platforms.
The main motivation behind the initiative is concern that lawmakers, with access to confidential information, could gain an unfair advantage over ordinary market participants. As rightly noted, congressmen should be writing laws, not betting on their outcomes. This bill is a logical continuation of the earlier Stop Insider Trading Act, approved by the committee on January 14, and aims to restore trust in public officials.
What exactly does the new bill prohibit?
The ban applies to wagers concerning specific government decisions, actions of authorities, and outcomes of political events. Violators face a significant fine: $2,000 or 10% of the bet amount—whichever is greater. Any profits obtained must also be returned. Importantly, the fine cannot be paid using official expenses, Senate funds, or political donations. For those who attempt to resign without settling the debt, the case will be referred to the Department of Justice for a civil lawsuit. Notably, the law does not affect bets on non-political events, such as sports.
Markets and Congress prepare for new rules
Steil's bill is just one part of a broader campaign to tighten oversight. 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 combating insider trading on any platform. The House of Representatives also has a similar initiative, the PREDICT Act.
Market operators themselves are already taking action. In June, Kalshi launched a risk assessment and employment verification system to prevent insiders. Polymarket, in turn, has brought in Chainalysis and is building an on-chain monitoring system. This indicates that the industry recognizes the risks and is striving for self-regulation, but pressure from lawmakers will only intensify.
Cryptalist Analysis: This wave of regulation is a landmark moment for prediction markets. On one hand, it confirms their growing importance; on the other, it sets a precedent for strict control. In the short term, this could reduce trading volumes in political contracts, but in the long term, it will strengthen the sector's legitimacy if platforms can effectively implement KYC and anti-insider mechanisms. Investors should closely monitor developments: bipartisan support for the bills in both chambers suggests a high likelihood of their passage.