The U.S. Congress targets prediction markets: new bill bans betting for lawmakers
A serious regulatory initiative is brewing in Washington that could fundamentally reshape the landscape of political prediction markets. Republican Brian Steil, who chairs the House Committee on Administration, has introduced the Stop Lawmakers from Predicting Act. The bill directly targets platforms like Kalshi and Polymarket and proposes a complete ban on bets related to political events and government decisions for members of Congress, their spouses, and minor children.
What exactly does the bill prohibit?
The essence of the initiative is an extension of the previously approved Stop Insider Trading Act. Steil's main motivation is to prevent lawmakers from profiting from insider information that is unavailable to 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 outcome," he stated.
The ban covers wagers concerning 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 obtained from such operations are subject to mandatory seizure. Notably, it will be impossible to pay the fine using official funds, the Senate budget, or political donations. Unpaid debts may be referred to the Department of Justice for civil action, even if the congressman resigns. Bets on non-political events, such as sports, are not subject to the law.
Platforms and Congress prepare for new rules
Steil's bill is just one part of a large-scale offensive against prediction markets. In March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced their own proposal—the Public Integrity in Financial Prediction Markets Act—aimed at combating trading on non-public information on any platform. In the House of Representatives, the PREDICT Act is moving forward in parallel with similar measures for officials' families. Earlier, the Senate separately banned prediction market betting for senators and their staff.
Market operators themselves, feeling the pressure, are taking preventive steps. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to filter out insiders. Polymarket, in turn, enlisted Chainalysis to build an on-chain monitoring system. Whether the final document will be adopted largely depends on political agreements between Republicans and Democrats, but the direction is already clear: the era of unregulated political betting in the United States is coming to an end.
Expert opinion: Steil's initiative is not just a fight against insider trading but a first step toward total user verification on political markets. If the law is passed, it will create a powerful precedent: Kalshi and Polymarket will have to implement KYC procedures at the level of the banking sector, which will hit anonymity but could legitimize the entire industry in the long term. However, for now, prediction markets remain in a zone of turbulence—investors are pricing in a high probability of stricter regulation.