The U.S. Congress is preparing a ban on political betting: Kalshi and Polymarket in the crosshairs
A serious conflict is brewing in the American political system around prediction markets. Republican Brian Steil, who chairs the House Administration Committee, has introduced a bill called the Stop Lawmakers from Predicting Act. This document is directly aimed at preventing members of Congress, their spouses, and minor children from using platforms like Kalshi and Polymarket.
What is the essence of the ban?
Steil's initiative is a logical continuation of the previously passed Stop Insider Trading Act, approved by the committee on January 14. The lawmakers' main concern is obvious: access to non-public information about government decisions gives congressmen an unfair advantage over ordinary market participants. As Steil aptly put it: "Americans should be confident that their congressman is not profiting from insider information. Lawmakers should write laws, not bet on their outcomes."
The bill prohibits bets on specific government decisions, actions of authorities, and outcomes of political events. Violators face a serious fine — $2000 or 10% of the bet amount (whichever is greater). Illegally obtained profits must be returned. Notably, the fine cannot be paid using official funds, the Senate budget, or political donations. If a violator resigns without settling the debt, the case will be referred to the U.S. Department of Justice for a civil lawsuit. Importantly, the ban does not apply to non-political events, such as sports matches.
Systemic struggle and platform reactions
Steil's bill is just part of a broader campaign. 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. In the House of Representatives, the PREDICT Act is moving forward in parallel, with similar measures for the families of officials. Earlier, the Senate had already separately banned senators and their staff from betting on prediction markets.
The market operators themselves are also preparing for stricter rules. Back in June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to filter out insiders. Polymarket, in turn, brought in Chainalysis to build an on-chain monitoring system.
My analysis: This wave of regulation is a significant signal for the entire industry. Prediction markets, especially those on the blockchain, are ceasing to be a "gray area." The question is not whether regulation will come, but how strict it will be. If the ban for congressmen passes, it will create a powerful precedent and likely lead to stricter KYC/AML procedures on all major platforms, including decentralized ones. Polymarket, which actively uses Arbitrum, will face particular challenges — anonymity here will be under attack first and foremost.