The U.S. Congress targets prediction markets: bill bans betting for officials
The regulatory battle surrounding prediction markets in the United States is escalating. Wisconsin Republican and Chairman of the House Committee on Administration, Bryan Steil, has introduced the Stop Lawmakers from Predicting Act. This bill directly prohibits members of Congress, their spouses, and minor children from betting on political outcomes and government decisions on platforms such as Kalshi and Polymarket.
The initiative did not arise in a vacuum. The key danger is lawmakers using insider information unavailable to ordinary market participants. Congress members have exclusive access to data on future bills and political decisions, creating a glaring conflict of interest. Steil emphasizes: "Americans should be confident that their congressman is not profiting from insider information. Lawmakers should write laws, not bet on their outcomes."
What exactly does the bill prohibit?
The document builds on the provisions of the Stop Insider Trading Act, approved by the committee as early as January 14. The ban covers bets concerning specific government decisions, actions of authorities, and outcomes of political events. Violations carry a fine: $2,000 or 10% of the bet amount, whichever is greater. Any profits obtained must be returned. Notably, the fine cannot be paid from official expenses or political donations. Those who resign without settling the debt may be referred to the U.S. Department of Justice for a civil lawsuit. Bets on non-political events, such as sports, are not affected by the law.
Markets and Congress prepare for new rules
Steil's bill is just part of a broader trend toward stricter oversight. In March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced their own proposal—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. Earlier, the Senate separately banned senators and their staff from betting on prediction markets.
Whether the bill will pass largely depends on agreements between Republicans and Democrats. Both chambers of Congress are moving in the same direction. Market operators themselves are also preparing for changes: Kalshi launched a risk assessment and employment verification system in June, while Polymarket integrated Chainalysis for on-chain monitoring.
My analysis: Prediction markets are becoming victims of their own success. Their political liquidity has attracted regulators' attention, and the industry will now face inevitable tightening of rules. This is not the end for Polymarket or Kalshi, but a signal that the "Wild West" era in this niche is coming to an end. Investors should prepare for stricter KYC requirements and possible restrictions on certain categories of contracts.