U.S. lawmakers are preparing a ban on betting in Kalshi and Polymarket: a new blow to prediction markets
The American prediction market, where not only money but also political reputation is at stake, faces a new regulatory threat. Republican Congressman Bryan Steil, who chairs the House Committee on Administration, has introduced the "Stop Lawmakers from Predicting Act." The bill directly prohibits members of Congress, their spouses, and minor children from betting on political events and government decisions using platforms like Kalshi and Polymarket.
Steil's initiative is not an isolated move but part of a broader campaign against insider trading in the field of political forecasting. The core message of the bill is simple and severe: lawmakers should write laws, not bet on them. Concerns that access to confidential information could give congressmen an unfair advantage over ordinary market participants have become the main catalyst for this movement.
Steil's bill builds on ideas laid out in the Stop Insider Trading Act, which the committee approved on January 14. Under the new rules, bets on specific votes, government actions, and outcomes of political events will be strictly prohibited. Violators face a serious fine of $2,000 or 10% of the bet amount, whichever is greater. Profits obtained from such transactions must be returned. Notably, paying the fine with official funds or political donations will be impossible. For those who attempt to resign without settling the debt, the case will be referred to the Department of Justice for a civil lawsuit. It is important to emphasize that the law does not affect bets on non-political events, such as sports.
Multiple Blow to Markets
Steil's bill is just one element of the overall picture. In March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced their own project—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 officials' families. The Senate has already separately banned senators and their staff from betting on prediction markets.
Market operators themselves, aware of the pressure, are taking preventive steps. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from entering the platform. Polymarket, in turn, has brought in Chainalysis and is building an on-chain monitoring system.
Expert opinion: Prediction markets are a powerful tool for gathering information, but their legitimacy directly depends on the honesty of participants. These initiatives are not just about fighting insider trading but an attempt to preserve trust in the very institution of political forecasting. If the law is passed, we will see not only an outflow of liquidity from "political" contracts but also increased competition among platforms for the purity of their audience. This is a positive signal for the long-term health of the market, although in the short term it may cause volatility on Polymarket and Kalshi.