U.S. lawmakers are preparing a ban on betting in Polymarket and Kalshi: a new blow to prediction markets
The regulatory battle over political prediction markets in the U.S. is entering a new phase. House Administration Committee Chairman, Republican Bryan Steil, has introduced the Stop Lawmakers from Predicting Act. This bill directly targets preventing members of Congress, their spouses, and minor children from profiting from bets using platforms like Kalshi and Polymarket.
The primary motivation for the initiative is combating insider trading. The core issue is that lawmakers have access to non-public information unavailable to the general public. Betting on the outcomes of political events, government decisions, or specific actions by authorities creates an unacceptable conflict of interest. As emphasized in the document, "Americans must be confident that their congressman is not profiting from insider information. Lawmakers' job is to write laws, not bet on them."
The bill provides for serious sanctions: a fine of $2,000 or 10% of the bet amount (whichever is greater), along with mandatory forfeiture of all profits gained. Notably, the fine cannot be paid using official funds, Senate budget allocations, or political donations. Furthermore, if an offender resigns without paying the fine, their case may be referred to the Department of Justice for a civil lawsuit. It is important to note that the ban does not apply to non-political events, such as sports.
This initiative is part of a broader trend toward tightening control. In March, a group of senators (Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff) already introduced a similar bill, the Public Integrity in Financial Prediction Markets Act, aimed at combating trading on non-public information across all platforms. The House of Representatives is also considering the PREDICT Act, which addresses the families of government employees. Earlier, the Senate separately banned its members and staff from trading on prediction markets.
The platform operators themselves, feeling the pressure, are trying to get ahead. As early as June, Kalshi implemented a risk assessment system, employment verification, and whistleblower channels to prevent insiders. Polymarket, for its part, has brought in Chainalysis to monitor transactions and is building its own on-chain control system.
Analyst's opinion: Steil's bill is not just another regulatory initiative but a clear signal to the market. Political prediction markets are in the crosshairs, and their future will depend on their ability to prove independence from insider manipulation. If the bill passes, it could seriously impact liquidity and interest from major players connected to politics. However, for the long-term legitimacy of the industry, such cleansing of conflicts of interest is a necessity.