U.S. lawmakers are preparing a ban on betting through Polymarket and Kalshi: a new law against insider trading
The regulatory battle surrounding prediction markets in the US is entering a new phase. Wisconsin Republican and Chairman of the House Committee on Administration, Bryan Steil, has 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 such as Kalshi and Polymarket.
The key motive behind the initiative is to prevent profiting from non-public information. By definition, lawmakers have access to data that is unavailable to ordinary market participants. Steil emphasizes: "Americans should be confident that their congressman is not profiting from insider information. Lawmakers should be writing laws, not betting on their outcomes." This is a direct attack on potential conflicts of interest, which have become particularly noticeable amid the explosive growth in popularity of political contracts.
What exactly the bill prohibits
The new document builds on the provisions of the Stop Insider Trading Act, approved by the committee on January 14. The ban covers bets concerning 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. All profits obtained are subject to confiscation. Notably, it will be impossible to pay the fine using official expenses, Senate funds, or political donations. Those who resign without settling the debt may be referred to the US Department of Justice for a civil lawsuit. Importantly, the law does not affect bets on non-political events, such as sports.
A broad coalition against insider trading
Steil's bill is just one part of a larger offensive. 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. In the House of Representatives, the PREDICT Act is simultaneously advancing with similar measures for the families of officials. Earlier, the Senate separately banned senators and their staff from betting on prediction markets. The bipartisan consensus on this issue is clear.
The market operators themselves are not waiting idly. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket has brought in Chainalysis and is building an online monitoring system. Prediction markets are clearly preparing for stricter rules, understanding that reputational risks and regulatory pressure will only increase.
Expert opinion: This is a logical and timely step. Prediction markets are a powerful tool for information aggregation, but their Achilles' heel is vulnerability to insider trading by those who make decisions. Closing this loophole will not only increase trust in the platforms themselves but also strengthen the integrity of the political system. The only question is how quickly the bill will pass through both chambers of Congress.