U.S. lawmakers are preparing a ban on betting in Polymarket and Kalshi: a new law against insider trading
Prediction markets such as Polymarket and Kalshi have come under scrutiny from lawmakers. Wisconsin Republican and Chairman of the House Committee on Administration, Bryan Steil, has introduced the Stop Lawmakers from Predicting Act. The bill explicitly prohibits members of Congress, their spouses, and minor children from betting on political events and government decisions.
The main reason is concern that lawmakers with access to confidential information could gain an unfair advantage over ordinary market participants. As Steil himself stated, "Americans should be confident that their congressman is not profiting from insider information. Lawmakers should be writing laws, not betting on their outcomes."
What exactly the new law prohibits
The bill builds on the provisions of the Stop Insider Trading Act, which the committee approved on January 14. The ban applies to bets concerning specific government decisions, actions of authorities, and outcomes of political events. Violators face a fine of $2,000 or 10% of the bet amount—whichever is greater. Any profits obtained must also be returned. Notably, it will be impossible to pay the fine using official funds, Senate budget, or political donations. Those who resign without settling the debt may be referred to the Department of Justice for a civil lawsuit. Sports betting and other non-political markets are not affected by the law.
Large-scale cleanup of prediction markets
Steil's initiative is just part of a broader trend toward tightening control. In 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 trading of confidential information on any platform. In the House of Representatives, the PREDICT Act is simultaneously advancing with similar measures for the families of officials. Earlier, the Senate separately banned senators and their staff from betting on prediction markets.
Platform operators themselves are also preparing for new rules. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from entering the platform. Polymarket, in turn, has integrated Chainalysis and is building an on-chain monitoring system.
My expert opinion: Prediction markets are a powerful tool for gathering information and hedging risks. However, their legitimacy directly depends on the integrity of participants. If lawmakers can use their official positions for personal gain, trust in these platforms will be undermined. This bill is a logical step that will not only protect the markets but also strengthen the reputation of Congress itself. The only question is how quickly positions can be aligned between Republicans and Democrats in both chambers.