The U.S. Congress is preparing a ban on betting in Polymarket and Kalshi: a new battle for ethics
A serious blow to prediction markets is brewing in the American political landscape. Representative Bryan Steil, a Republican from Wisconsin who chairs the Committee on House Administration, has introduced the Stop Lawmakers from Predicting Act. This bill is directly aimed at preventing members of Congress, their spouses, and minor children from using platforms like Kalshi and Polymarket.
The main motive is to prevent the use of insider information. Steil emphasizes that Americans must be confident that their elected officials are not profiting from confidential data unavailable to ordinary market participants. Lawmakers should be writing laws, not betting on their outcomes — this is the key idea behind the initiative.
What exactly does the bill prohibit?
The document expands on the provisions of the Stop Insider Trading Act, approved by the committee on January 14. The ban covers bets on specific government decisions, actions by authorities, and outcomes of political events. Violators face a fine of $2,000 or 10% of the bet amount — whichever is greater. Profits must be returned. Notably, the fine cannot be paid using official expenses, Senate funds, or political donations. Those who resign without paying the fine may be referred to the U.S. Department of Justice for a civil lawsuit. Sports and other non-political bets are not subject to the law.
Platforms and Congress prepare for new rules
Steil's bill is just part of a broader wave of tightening 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 also has a counterpart, the PREDICT Act, with similar measures for the families of officials. Earlier, the Senate separately banned senators and their staff from betting on prediction markets.
The market operators themselves are not standing idly by. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket has integrated Chainalysis and is building an on-chain monitoring system.
My analysis: The movement to ban betting for lawmakers is a logical step given the growing influence of decentralized prediction markets. However, the effectiveness of such measures will depend on technical implementation: IP blocking or KYC can be bypassed via VPNs and non-custodial wallets. Truly combating insider trading will require deeper solutions, including transaction transparency and automated auditing of key individuals' behavior.