US lawmakers are preparing a ban on betting on Kalshi and Polymarket: a new law against insider trading
Regulatory pressure on prediction markets in the United States is reaching a new level. A bill, the Stop Lawmakers from Predicting Act, has been introduced in Congress, directly prohibiting members of the House of Representatives, their spouses, and minor children from participating in bets on political events and government decisions. The initiative comes from Republican Brian Steil, who chairs the House Committee on House Administration.
What is behind the ban?
The main motivation is combating potential insider trading. Lawmakers have access to confidential information that is unavailable to ordinary market participants. Using this advantage to place bets on platforms like Kalshi and Polymarket undermines trust in state institutions. As Steil emphasizes, congressmen should write laws, not bet on them.
The new bill builds on the provisions of the Stop Insider Trading Act, which was approved by the committee on January 14. Violations carry a fine of $2,000 or 10% of the bet amount—whichever is greater. Profits obtained from illegal bets must be returned. Notably, it will be impossible to pay the fine using official funds or political donations, and non-payers will be referred to the Department of Justice for a civil lawsuit.
Large-scale market cleanup
This is only part of a broader trend. 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 trading of confidential information on any platforms. The House of Representatives is also discussing the PREDICT Act with similar measures for the families of officials. Earlier, the Senate separately banned senators and their staff from betting on prediction markets.
Platform operators, in turn, are trying to preempt the tightening. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels. Polymarket has integrated Chainalysis and is building an on-chain monitoring system. It is clear that the industry recognizes the scale of the threat.
Cryptalist Analysis: This initiative is not just a fight against corruption but a signal of the maturity of prediction markets. Their influence on real politics is becoming too noticeable to remain in a "gray zone." However, the key question is how effectively bets can be tracked through decentralized platforms, where transaction anonymity remains high. In the short term, this will put pressure on sector tokens, but in the long term, it could lead to legalization and the creation of transparent, regulated alternatives.