U.S. lawmakers are preparing a ban on betting through Polymarket and Kalshi: a new law against insider trading
Wisconsin Republican and Chairman of the House Committee on Administration Bryan Steil has introduced the Stop Lawmakers from Predicting Act. The bill aims to prohibit members of the U.S. Congress, their spouses, and minor children from using prediction markets to bet on political outcomes and government decisions.
The main motivation behind this initiative is concern that lawmakers, with access to confidential and classified information, could gain an unfair advantage over ordinary market participants. Essentially, Congress is trying to close a loophole that would allow insiders to profit from their own decisions.
What exactly the bill prohibits
Steil's document is a logical extension of the Stop Insider Trading Act, approved by the committee on January 14. The new initiative aims to restore trust in public officials. In his statement, Steil emphasized: "Americans should be confident that their congressman is not profiting from insider information. Lawmakers should write laws, not bet on their outcomes."
The ban covers bets on specific government decisions, actions by authorities, and outcomes of political events. Violators face a fine of $2,000 or 10% of the bet amount—whichever is greater. Any profits obtained must be returned. Notably, the fine cannot be paid using official expenses, Senate funds, or political donations. Those who resign without settling the debt may be referred to the Department of Justice for civil litigation. The law does not affect bets on non-political events, such as sports.
Platforms and Congress prepare for new rules
Steil's bill is just part of a broader trend toward tighter control. 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 of confidential information on any platform. The House of Representatives also has the PREDICT Act with similar measures for officials' families. Earlier, the Senate separately banned senators and their staff from betting on prediction markets.
Whether the document will be adopted largely depends on agreements between Republicans and Democrats—similar initiatives are moving forward in parallel in both chambers. Market operators have also stated their positions. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket has partnered with Chainalysis and is building an online monitoring system.
My analysis: Prediction markets are one of the fastest-growing segments of the crypto industry, and regulatory attempts to restrict insider access to them are inevitable. However, the key question is how effectively bets can be tracked, especially through decentralized platforms. Polymarket and Kalshi have already demonstrated a willingness to comply, but full transparency in this area remains more of a goal than a reality for now.