Congressmen in the Crosshairs: New US Bill Bans Political Betting for Lawmakers
Another round of regulation for prediction markets is brewing in Washington. This time, lawmakers themselves are in the crosshairs. A bill, 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 outcomes and government decisions on platforms like Kalshi and Polymarket.
Essence of the Initiative and Motivation
The author of the document is the Chairman of the House Committee on Administration, Republican Bryan Steil. The key message is the inadmissibility of using insider information, to which lawmakers have access by virtue of their office. According to Steil, Congress should be writing laws, not betting on them using confidential data unavailable to ordinary market participants.
The bill is a logical continuation of another document — the Stop Insider Trading Act, previously approved by the committee. It aims to restore trust in public officials by eliminating even the hypothetical possibility of profiting from a privileged position.
Mechanism and Penalties
The ban applies to bets on specific government decisions, actions of authorities, and outcomes of political events. Violators face a significant fine: $2,000 or 10% of the bet amount — whichever is greater. All profits obtained are subject to confiscation. Notably, 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 Department of Justice for a civil lawsuit. Sports and other non-political events are not covered by the law.
Trend Towards Tightening
Steil's initiative is only part of a large-scale crackdown on insider trading in prediction markets. In March, a group of senators (Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff) introduced their own bill, the Public Integrity in Financial Prediction Markets Act. The House of Representatives is also considering the PREDICT Act with similar measures for the families of officials. Earlier, the Senate, by a separate decision, already banned senators and their staff from betting on these platforms.
Platform Reaction
Market operators are not waiting idly. Kalshi already implemented a risk assessment system, employment verification, and whistleblower channels in June to weed out insiders. Polymarket, in turn, has brought in Chainalysis and is developing an online monitoring system to detect suspicious activity.
Cryptalist Analysis: Prediction markets are becoming victims of their own success. Their growing popularity and influence on real events inevitably attract the attention of regulators. This bill is not a targeted strike but part of a systematic effort to integrate this class of assets into the legal framework. The question is where the line will be drawn between necessary protection against manipulation and excessive regulation that could stifle innovation in its infancy.