The US is targeting prediction markets: a bill prohibits congressmen from trading on Kalshi and Polymarket
Another round of cryptocurrency and decentralized market regulation is brewing in American politics. Brian Steil, a Republican from Wisconsin and Chairman of the House Committee on House Administration, has introduced the Stop Lawmakers from Predicting Act. This initiative aims to prohibit members of Congress, their spouses, and minor children from betting on political outcomes and government decisions on prediction platforms.
The main reason is a conflict of interest. Lawmakers with access to non-public information could gain an unfair advantage over ordinary market participants. "Americans should be confident that their congressman is not profiting from insider information. Lawmakers should be writing laws, not betting on their outcomes," Steil stated.
What exactly does the bill prohibit?
The document builds on the previously approved Stop Insider Trading Act. The ban applies to bets on specific government decisions, actions of 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 from official funds, the Senate budget, or political donations. Those who resign without settling the debt may be referred to the U.S. Department of Justice for a civil lawsuit. Sports betting and other non-political events are not covered by the law.
Platforms and Congress prepare for new rules
This is just part of a broader regulatory wave. 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 trading on non-public information on any platform. The House of Representatives also has a similar PREDICT Act, restricting bets for the families of officials. Earlier, the Senate separately banned senators and their staff from trading on prediction markets.
Whether the document will be adopted largely depends on agreements between Republicans and Democrats. However, market operators themselves are already preparing for changes. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders. Polymarket has integrated Chainalysis and is building an on-chain monitoring system.
Expert opinion from Cryptalist: Regulatory pressure on prediction markets is a logical step, given their growing popularity and impact on real financial flows. However, bans for insiders are just the tip of the iceberg. The main question is how exactly "non-public data" will be defined and whether this will lead to excessive control that stifles innovation in this DeFi segment. Polymarket and Kalshi are currently in a favorable position, demonstrating readiness for compliance, but the market awaits clear and uniform rules for all participants.