Insider betting banned: US Congress targets Polymarket and Kalshi
American lawmakers may soon lose the ability to bet on political outcomes through popular prediction market platforms such as Kalshi and Polymarket. A Republican congressman from Wisconsin, chairman of the House Committee on Administration, has introduced a bill called the Stop Lawmakers from Predicting Act. The document aims to curb potential insider trading abuses by members of Congress and their families.
The key idea of the initiative is to prevent a situation where a legislator, possessing confidential data about upcoming decisions, could use prediction platforms for personal enrichment. The bill directly prohibits members of Congress, their spouses, and minor children from betting on specific government decisions, actions of authorities, and outcomes of political events.
Penalty Mechanism and Exceptions
Violators face a serious fine — $2,000 or 10% of the bet amount, whichever is greater. Any profits obtained must be returned in full. It is important to note that paying the fine from official funds, the Senate budget, or political donations will be impossible. In case of non-payment, the matter may be referred to the Department of Justice for a civil lawsuit. The law does not affect bets on non-political events, such as sports matches.
Escalation of Regulatory Pressure
This bill is part of a broader trend toward tightening control over prediction markets. Earlier, in March, a group of senators introduced a similar bill, the Public Integrity in Financial Prediction Markets Act, and the House of Representatives is reviewing the PREDICT Act with similar provisions. The Senate itself has already separately banned its members and staff from betting on such markets.
Platforms, in turn, are trying to adapt to the new realities. In June, Kalshi implemented a risk assessment and employment verification system, while Polymarket enlisted Chainalysis to build an on-chain monitoring system to filter out potential insiders.
Cryptalist Analysis: This regulatory pressure is a logical step in the evolution of prediction markets. Although Polymarket and Kalshi strive for legitimacy and transparency, the very nature of these platforms creates unique opportunities for insider trading, especially in the political sphere. If the law is passed, it could significantly limit liquidity in political contracts, but in the long term, it will clear the market of dubious participants and strengthen trust in this asset class.