U.S. Congress prepares a ban on betting in Polymarket and Kalshi: a new law against insider trading
American lawmakers may lose access to prediction markets. A bill titled the "Stop Lawmakers from Predicting Act" has been introduced in the House of Representatives, which directly prohibits members of Congress, their spouses, and minor children from betting on political events and government decisions through platforms such as Kalshi and Polymarket.
The bill's sponsor is Wisconsin Republican Bryan Steil, who chairs the House Committee on House Administration. The main motivation is to prevent a situation where lawmakers could use confidential, insider information to gain financial benefits on prediction markets while remaining beyond the reach of ordinary participants.
Details and Penalties
The new bill is a logical continuation of the Stop Insider Trading Act, which the committee approved on January 14. According to Steil, this measure aims to restore trust in public officials. "Americans should be confident that their congressman is not profiting from insider information. Lawmakers should write laws, not bet on their outcomes," he emphasized.
The ban applies to bets related to 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. Illegally obtained profits must be returned. An important nuance: it will be impossible to pay the fine using official funds, the Senate budget, or political donations. In case of non-payment, the matter may be 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.
A Broader Trend Toward Regulation
Steil's initiative is just one part of a large-scale campaign to tighten control over prediction markets. 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 insider trading on any platforms. In the House of Representatives, the PREDICT Act is being considered in parallel, with similar restrictions for the families of government employees. Earlier, the Senate separately banned senators and their staff from betting on prediction markets.
Platform operators themselves are also preparing for stricter rules. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket has brought in Chainalysis and is building an online monitoring system. Whether the law will pass largely depends on bipartisan agreements, but the direction is clear: both chambers of Congress are determined.
My comment: Prediction markets are a powerful tool for aggregating information, but their Achilles' heel is vulnerability to insider trading. If lawmakers truly gain access to confidential data, it will undermine trust in the platforms and provoke strict regulation. Steil's initiative is not panic, but a preventive strike that, in the long term, could even strengthen the legitimacy of Polymarket and Kalshi as transparent financial instruments.