U.S. lawmakers are preparing a ban on betting on Kalshi and Polymarket: a new law against insider trading
American lawmakers may lose the ability to bet on political outcomes and government decisions through prediction platforms such as Kalshi and Polymarket. Wisconsin Republican 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 participating in bets on prediction markets related to politics and government actions.
The main motive behind the initiative is to prevent profiting from non-public information. Lawmakers with access to sensitive data could potentially 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 outcome."
The bill introduces strict penalties: a fine of $2,000 or 10% of the bet amount—whichever is greater. Any profits obtained must be returned. Notably, paying the fine using official expenses, Senate funds, or political donations will be prohibited. Violators who have resigned may be referred to the U.S. Department of Justice for civil action.
A Double Blow to Prediction Markets
Steil's bill builds on the previously passed Stop Insider Trading Act, approved by the committee on January 14. This is part of a broader campaign to tighten controls. 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 insider trading on any platform. The House of Representatives is also considering the PREDICT Act with similar measures.
Market operators themselves are already preparing for new rules. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket, in turn, has brought in Chainalysis and is building an on-chain monitoring system.
Cryptalist Analysis: This is a landmark moment for the entire prediction market industry. Tightening rules for political contracts is a logical step, given the intensity of debates over election integrity and lobbying. However, the key question is whether the fight against insider trading will escalate into excessive regulation that stifles innovation. Polymarket and Kalshi are not just casinos—they are complex financial instruments, and their future depends on how skillfully lawmakers can separate the wheat from the chaff.