U.S. lawmakers are preparing a ban on betting in Kalshi and Polymarket: combating insider trading on prediction markets
A bill has been introduced in the U.S. Congress that could radically change the rules of the game for prediction markets. Republican Brian Steil, who chairs the House Committee on House Administration, has proposed the "Stop Lawmakers from Predicting Act." The document aims to block access to platforms like Kalshi and Polymarket for members of Congress, their spouses, and minor children.
Steil's primary motivation is transparent and uncompromising: lawmakers have unique access to confidential information, and using this advantage to bet on political outcomes or government decisions undermines trust in governing institutions. As the initiator himself rightly noted, "lawmakers should write laws, not bet on their outcomes." This is not just a matter of ethics—it is a direct strike against potential insider schemes that could thrive on the opacity of political processes.
What exactly does the new bill prohibit?
The document builds on ideas laid out in the earlier "Stop Insider Trading Act," which the committee approved on January 14. The new ban extends to bets concerning specific government decisions, actions by authorities, and outcomes of political events. Violators face a significant fine—$2,000 or 10% of the bet amount (whichever is greater). Moreover, any profits obtained illegally must be returned. An important nuance: it will be impossible to pay the fine using official funds, Senate budgets, or political donations. Those who attempt to evade responsibility will be referred to the Department of Justice for civil action. The law does not affect bets on non-political events—such as sports.
Interestingly, this initiative is only part of a broader trend. Back in March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced their own "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. The Senate has already separately banned its members and staff from betting on prediction markets.
Market reaction: Kalshi and Polymarket prepare for change
The platform operators themselves are not waiting for the law to pass. As early as June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to filter out insiders. Polymarket, for its part, has integrated the Chainalysis analytics platform and is building its own online monitoring system. This indicates that the industry recognizes the risks and is attempting self-regulation to avoid stricter restrictions.
My analysis: This move is a logical continuation of the fight for market integrity that is gaining momentum in the U.S. If the law is passed, we will see not only the cleansing of prediction markets from potential manipulation but also a serious precedent for regulating the entire crypto industry. Platforms will have to implement even stricter KYC and monitoring procedures, which, on one hand, will complicate entry for retail users, and on the other, will increase trust from institutional investors. Prediction markets are becoming a battleground for transparency, and this is good for the long-term health of the entire ecosystem.