U.S. authorities are preparing a ban on betting for members of Congress: Polymarket and Kalshi in the crosshairs
The regulatory guillotine in the US is hanging over prediction markets. Republican Brian Steil, Chairman of the House Committee on House Administration, introduced the Stop Lawmakers from Predicting Act. The bill directly prohibits members of Congress, their spouses, and minor children from betting on political events and government decisions using platforms like Kalshi and Polymarket.
The initiative is a direct continuation of the fight against insider trading. In January, the relevant committee already approved the Stop Insider Trading Act. Now Steil is going further, aiming to completely eliminate conflicts of interest. His argument is simple and harsh: lawmakers should write laws, not bet on their outcomes using access to confidential information.
What exactly does the bill prohibit?
The ban covers bets on specific government decisions, actions of authorities, and outcomes of political events. Violators face a fine of $2,000 or 10% of the bet amount, whichever is greater. Profits must be returned in full. Notably, the fine cannot be paid from official funds or political donations. If a violator leaves office without settling the debt, the case will be referred to the Department of Justice for a civil lawsuit. Bets on non-political events, such as sports, are not subject to the law.
Platforms and Congress prepare for new rules
Steil's bill is only part of the systemic pressure. In March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced their own proposal — the Public Integrity in Financial Prediction Markets Act. In the House of Representatives, the PREDICT Act is moving forward in parallel with similar measures for officials' families. Earlier, the Senate separately banned senators and their staff from betting on prediction markets.
Platform operators are also preparing for stricter regulations. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders. Polymarket brought in Chainalysis and is building an on-chain monitoring system. The market understands: transparency is the only way to survive under regulatory pressure.
My analysis: The initiative seems logical from an ethical standpoint, but it will hit the liquidity of political markets. Polymarket and Kalshi will lose a significant portion of institutional "smart money." However, nothing will change for retail traders — sports and non-political contracts will remain outside the scope of the law. The main question is whether platforms will have time to implement reliable KYC/AML mechanisms before Congress passes the final version of the bill.