U.S. lawmakers are preparing a ban on betting on Kalshi and Polymarket: a new law against insider trading
Republican Congressman from Wisconsin and Chairman of the House Committee on Administration, Bryan Steil, has introduced the "Stop Lawmakers from Predicting Act." This initiative aims to completely prevent members of Congress, their spouses, and minor children from profiting on prediction markets using confidential information.
What is the essence of the ban?
The new document is a logical continuation of the earlier "Stop Insider Trading Act," approved by the committee on January 14. Steil directly states that Americans must be confident that their elected officials are writing laws, not betting on them. The bill prohibits trading on the outcomes of specific government decisions, actions by authorities, and political events. Violations carry a fine of $2,000 or 10% of the bet amount (whichever is greater). Illegally obtained profits must be returned. The fine cannot be paid using official funds, Senate budget, or political donations. Those who resign without settling their debt may be referred to the U.S. Department of Justice for a civil lawsuit. It is important to note that the ban does not affect bets on non-political events, such as sports.
Large-scale market cleanup
Steil's initiative is just part of a broader movement to tighten control. As early as March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced the "Public Integrity in Financial Prediction Markets Act," aimed at combating insider trading on any platform. In the House of Representatives, the "PREDICT Act" is moving forward in parallel, with similar measures for the families of officials. Earlier, the Senate separately banned its members and staff from betting on prediction markets.
The market operators themselves are also preparing for new realities. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket, in turn, has partnered with Chainalysis and is building an on-chain monitoring system.
Expert opinion: The adoption of this law will be a serious blow to the reputation of Polymarket and Kalshi as platforms for political betting. On one hand, it will increase trust in prediction markets by cleansing them of manipulation. On the other hand, it will narrow the already limited liquidity in this segment. The market is clearly moving toward segregation: political contracts will become the prerogative of retail investors, while "whales" with insider information will be forced into the shadows.