Officials in the Crosshairs: The U.S. Prepares a Total Ban on Political Betting for Congress Members
The regulatory hammer looms over prediction markets. Republican Congressman Bryan Steil, who chairs the House Committee on Administration, has introduced the Stop Lawmakers from Predicting Act. The bill directly prohibits members of Congress, their spouses, and minor children from using platforms like Kalshi and Polymarket to bet on political events and government agency decisions.
The initiative is not an isolated attack but part of a systemic pressure campaign. Its predecessor, the Stop Insider Trading Act, was approved by the committee as early as January 14. Now Steil has gone further, arguing it is necessary to restore trust in public officials. His position is ironclad: "Americans must be confident that their congressman is not profiting from insider information. Lawmakers should write laws, not bet on their outcomes."
Mechanics of the Ban and Unprecedented Fines
The bill targets not only reputation but also finances. Violations carry a fine of $2,000 or 10% of the bet amount—whichever is greater. Any profits must be returned in full. Paying the fine from official expenses, Senate funds, or political donations is strictly prohibited. Those who attempt to resign without settling the debt will be referred to the U.S. Department of Justice for civil action.
An important nuance: the restrictions apply exclusively to political and government events. Sports betting and other non-political markets remain outside the scope of the law.
Consensus Against Insider Trading
This is not a solo campaign by Steil. In March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced a parallel bill—the Public Integrity in Financial Prediction Markets Act. It targets trading on non-public information across all platforms. In the House, the PREDICT Act is also advancing with similar measures for officials' families. Moreover, the Senate has already separately banned senators and their staff from betting on prediction markets.
Market operators themselves feel the heat and are preparing. Kalshi launched a risk assessment system, employment verification, and whistleblower channels back in June to weed out insiders. Polymarket, in turn, has brought in Chainalysis and is building an online monitoring system.
My analysis: This is a classic case where the regulatory guillotine cuts not only at obvious abuses but also at the very spirit of decentralized prediction markets. If the law passes, we will see not just fines for politicians but a significant reduction in liquidity for political contracts. Investors, fearing "dirty" money and reputational risks, will begin moving into more neutral niches. This will be a serious test for the entire prediction market industry regarding maturity and the ability to self-regulate.