Congressmen in the Crosshairs: New Bill Bans Political Betting via Kalshi and Polymarket
Prediction markets such as Kalshi and Polymarket have faced a serious challenge. The Stop Lawmakers from Predicting Act has been introduced in the U.S. Congress, which directly prohibits members of Congress, their spouses, and minor children from placing bets on political events and government decisions. The bill was initiated by Republican Brian Steil, who chairs the House Committee on House Administration.
The main motivation is to prevent the use of insider information. Lawmakers, having access to confidential data, could gain an unfair advantage over ordinary market participants. Steil emphasized: "Americans should be confident that their congressman is not profiting from insider information. Lawmakers should write laws, not bet on their outcomes." This statement reflects growing concern over ethical standards in the political environment.
Details and Consequences of the Bill
The bill builds on the provisions of the Stop Insider Trading Act, approved by the committee on January 14. 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 obtained from such transactions must be returned. Importantly, the fine cannot be paid from official expenses, Senate funds, or political donations. Those who resign without settling the debt may be referred to the U.S. Department of Justice for a civil lawsuit. Bets on non-political events, such as sports, are not subject to the law.
General Trend Toward Tightening
Steil's bill is just part of a broader trend. 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 trading of confidential information on any platform. The House of Representatives is also considering the PREDICT Act with similar measures for officials' families. Earlier, the Senate separately banned senators and their staff from betting on prediction markets.
Market operators themselves are responding to the pressure. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket, in turn, has integrated Chainalysis and is building an online monitoring system. The final adoption of the document largely depends on agreements between Republicans and Democrats—similar initiatives are already underway in both chambers.
Analytical Commentary from Cryptalist: This bill is a logical step in an era when prediction markets are becoming increasingly influential. However, it raises an important question: can regulation effectively separate political bets from non-political ones without stifling innovation? In my view, the key issue is not about bans but about transparency. If platforms like Kalshi and Polymarket can prove they are capable of independently identifying insiders, the need for strict laws may diminish. For now, we are witnessing a classic struggle between the drive for control and the development of decentralized finance.