U.S. lawmakers are preparing a ban on betting through Kalshi and Polymarket: a new blow to prediction markets
American lawmakers may soon lose the ability to participate in political betting on platforms like Kalshi and Polymarket. Republican Bryan Steil, who chairs the House Administration Committee, has introduced the Stop Lawmakers from Predicting Act, which directly prohibits members of Congress, their spouses, and minor children from betting on the outcomes of political events and government decisions.
The primary reason for the initiative is an obvious conflict of interest. Lawmakers have access to confidential information unavailable to ordinary market participants, creating grounds for insider trading. As Steil himself stated, Americans should be confident that their elected officials are writing laws, not betting on them. This follows the logic of the Stop Insider Trading Act, approved by the committee on January 14.
What exactly does the bill prohibit
The document targets bets on specific government decisions, actions of authorities, and outcomes of political events. Violations carry a fine of $2,000 or 10% of the bet amount—whichever is greater. Profits obtained from prohibited transactions must be returned. An important nuance: the fine cannot be paid using official funds, Senate budget, or political donations. In case of non-payment, the case is referred to the U.S. Department of Justice for a civil lawsuit. The law does not affect bets on non-political events, such as sports.
Platforms and Congress prepare for new rules
This is not an isolated initiative. 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 of confidential information on any platforms. The House of Representatives also has a similar PREDICT Act. Moreover, the Senate has already separately banned betting on prediction markets for senators and their staff.
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 entering the platform. Polymarket has brought in Chainalysis and is building an online monitoring system. This indicates that the industry recognizes the risks and is attempting to self-regulate before the government steps in.
My analysis: Tightening rules for political betting is a logical step, but it could also have a counterproductive effect. A ban on congressmen will not fully solve the problem of insider trading, as major institutional investors remain the key players in these markets. However, it sets a precedent that could lead to broader regulation of the entire prediction market industry in the U.S. For Kalshi and Polymarket, this is a signal: transparency and compliance are becoming not an option, but a mandatory condition for survival.