Congressmen in the Crosshairs: US Lawmakers Face a Ban on Betting in Kalshi and Polymarket
The regulatory battle surrounding prediction markets in the United States is entering a new phase. A Republican congressman from Wisconsin, who chairs the House Committee on Administration, has introduced the Stop Lawmakers from Predicting Act. This bill is directly aimed at preventing members of Congress, their spouses, and minor children from betting on political outcomes and government decisions through platforms such as Kalshi and Polymarket.
The key motive behind the initiative is to prevent the use of confidential information. According to the author, lawmakers have unique access to data that is unavailable to ordinary market participants. Bets based on insider information undermine trust in institutions. As the sponsor himself stated, "Americans should be confident that their congressman is not profiting from insider information. Lawmakers should write laws, not bet on their outcomes." This is not just a fight against corruption; it is a blow to the reputation of the entire political system.
What exactly the bill prohibits
The document builds on the earlier Stop Insider Trading Act, which was approved by the committee in January. The ban applies to bets related to 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 profit gained from such a bet 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 a civil lawsuit. An important nuance: the law does not affect bets on non-political events, such as sports.
Platforms and Congress: preparing for new rules
This is just part of a broader trend toward tightening regulations. Back in March, senators introduced their own bill—the Public Integrity in Financial Prediction Markets Act—aimed at combating trading on non-public information on any platform. The House of Representatives also has a similar PREDICT Act. Previously, the Senate separately banned prediction market bets for senators and their staff.
The market operators themselves, anticipating pressure, have begun to act proactively. In June, Kalshi launched a risk assessment and employment verification system, as well as whistleblower channels. Polymarket integrated Chainalysis for on-chain monitoring. Whether the bill will pass largely depends on bipartisan agreements—similar initiatives are underway in both the Senate and the House of Representatives.
My expert commentary: Prediction markets are a powerful tool for gathering information and hedging risks. However, when market participants have unequal access to data, the entire model breaks down. This bill is an inevitable and logical response to the growing popularity of these platforms. It will not kill the industry, but it will force it to become more transparent and ethical. Investors should closely monitor developments: regulation could significantly impact liquidity and volatility in these markets.