Congressmen in the Crosshairs: New Bill Bans Political Betting via Kalshi and Polymarket
A new phase of regulating cryptocurrency prediction markets is brewing in Washington. Republican Bryan Steil, Chairman of the House Committee on House Administration, has introduced the Stop Lawmakers from Predicting Act. The bill directly prohibits members of Congress, their spouses, and minor children from placing funds on political outcomes and government decisions through platforms such as Kalshi and Polymarket.
The main driving force behind this initiative is the concern that lawmakers, having access to non-public information, could use it for personal enrichment on prediction markets. Essentially, it is an attempt to curb potential insider trading in a new, decentralized format.
What exactly does the bill prohibit?
The document builds on the earlier Stop Insider Trading Act, which was approved by the committee on January 14. As Steil emphasizes, Americans must be confident that their members of Congress are "writing laws, not betting on their outcome." The ban applies to wagers concerning specific government decisions, actions of authorities, and political events.
Violators face a significant fine: $2,000 or 10% of the bet amount—whichever is greater. Any profits obtained from such transactions 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 U.S. Department of Justice for a civil lawsuit.
An important nuance: the law does not affect bets on non-political events, such as sports. This clearly indicates the targeted focus on combating political insider information.
Platforms and Congress prepare for new rules
Steil's bill is only part of a broader trend toward stricter oversight. In March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff already introduced their own proposal—the Public Integrity in Financial Prediction Markets Act—aimed at combating trading on non-public information on any platform. A similar PREDICT Act is also being discussed in the House of Representatives.
The market operators themselves are not idle. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket has integrated Chainalysis and is building an on-chain monitoring system.
Whether the law will be passed largely depends on agreements between Republicans and Democrats. But the trend is clear: regulators are seriously targeting prediction markets, and the crypto community should prepare for stricter rules.
Cryptalist Analysis: This step is a logical continuation of the fight against unfair trading, which has long been overdue in traditional finance. Prediction markets are a powerful tool, but their legitimacy directly depends on the honesty of participants. If lawmakers can use insider information, trust in these platforms will be undermined. Steil's initiative is a painful but necessary measure to heal the entire ecosystem.