U.S. lawmakers may be banned from trading on Kalshi and Polymarket: a new law against insider betting
A new legislative offensive against prediction markets is brewing in Washington. Republican Congressman Bryan Steil, who chairs the House Administration Committee, 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 outcomes and government decisions using platforms such as Kalshi and Polymarket.
The primary motivation is to prevent the abuse of official positions. Lawmakers have access to confidential information unavailable to ordinary market participants. As Steil rightly noted, their job is to write laws, not to bet on them. The bill is a logical continuation of the Stop Insider Trading Act, which the committee approved on January 14.
Essence and Penalties
The ban covers bets related to specific votes, government actions, and outcomes of political events. Violators face a fine of $2,000 or 10% of the bet amount, whichever is greater. Illegally obtained profits must be returned. An important nuance: the fine cannot be paid from official funds or political donations. Unpaid debts may be referred to the Department of Justice for civil action. Sports betting and other non-political wagers are not subject to the law.
Bipartisan Attack on Prediction Markets
Steil's initiative is just part of a systemic struggle. In March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced their own bill—the Public Integrity in Financial Prediction Markets Act. The House of Representatives is also considering the PREDICT Act with similar measures. Earlier, the Senate separately banned senators and their staff from trading on prediction markets.
Platform operators themselves are not sitting idle. In June, Kalshi launched a risk assessment system and whistleblower channels to prevent insiders. Polymarket, in turn, integrated Chainalysis for on-chain monitoring.
Cryptalist Analysis: This is not just a fight against insider trading—it is the first serious attempt to regulate prediction markets at the federal level. If the bills pass, we will see a precedent: political contracts could become subject to strict oversight, which would hit the liquidity and trust in such platforms. Polymarket and Kalshi will have to prove their viability in the new reality.