U.S. lawmakers are preparing a ban on betting in Kalshi and Polymarket: a new blow to prediction markets
American lawmakers may lose the ability to bet on political outcomes on giant platforms like Kalshi and Polymarket. Republican Brian Steil, who chairs the House Committee on Administration, has introduced a bill called the Stop Lawmakers from Predicting Act. This document directly prohibits members of Congress, their spouses, and minor children from participating in bets on politics and government decisions using prediction markets.
What is the essence of the ban and why it matters
Steil's initiative is a direct continuation of the earlier Stop Insider Trading Act, which the committee approved back on January 14. The key motivation is simple and alarming: lawmakers have access to confidential insider information unavailable to ordinary market participants. Using this data for betting gives them an unfair advantage and, in essence, allows them to profit from knowledge that should not influence market prices. "Americans should be confident that their congressman is not profiting from insider information. Lawmakers should be writing laws, not betting on their outcomes," Steil stated.
The bill targets exclusively political and government events: specific government decisions, votes, and election outcomes. Bets on sports or other non-political events are not covered by the document. Violations carry a substantial fine — $2,000 or 10% of the bet amount (whichever is greater). Illegally obtained profits must be returned in full. Importantly, the fine cannot be paid using official funds, Senate budget, or political donations. Violators who resign without paying the fine may be referred to the U.S. Department of Justice for a civil lawsuit.
Prediction markets under pressure: preparing for new realities
This is not an isolated initiative. In March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced their own project — the Public Integrity in Financial Prediction Markets Act, which combats trading on confidential information on any platform. In the House of Representatives, the PREDICT Act is moving forward in parallel with similar measures for officials' families. Earlier, the Senate separately banned its members and staff from betting on prediction markets.
The market operators themselves are not sitting idle. Back in June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from entering the platform. Polymarket, in turn, has brought in Chainalysis and is building an on-chain monitoring system to detect suspicious activity.
Analyst comment: This trend is a logical reaction by regulators to the rapid growth of prediction markets, where information has become a highly liquid asset. The ban on insiders is just the first step. Sooner or later, we will see stricter KYC/AML requirements for all participants on such platforms, which could significantly change the landscape of decentralized prediction markets, reducing their anonymity but increasing trust from institutional players.