The U.S. Congress targets prediction markets: new bill bans betting for lawmakers
A serious legislative initiative is brewing in Washington that could fundamentally reshape the landscape of political prediction markets. Republican Bryan Steil, Chairman of the House Committee on House Administration, has introduced the Stop Lawmakers from Predicting Act, a bill aimed at banning members of Congress, their spouses, and minor children from betting on political outcomes and government decisions on platforms like Kalshi and Polymarket.
What is the essence of the ban?
The main driving force behind this initiative is the fear of insider trading. Lawmakers with access to confidential information could use it for financial gain on prediction markets, undermining trust in government institutions. As Steil rightly notes, "lawmakers should be writing laws, not betting on their outcomes." The bill is a logical continuation of the Stop Insider Trading Act, which was approved by the committee as early as January 14.
The ban applies to bets concerning specific government decisions, actions of authorities, and results of political events. Violators face a serious fine — $2,000 or 10% of the bet amount, whichever is greater. Illegally obtained profits must be returned. Notably, the fine cannot be paid from official funds or political donations, and non-payers may be referred to the U.S. Department of Justice. The law does not affect bets on non-political events, such as sports.
Multiple fronts of attack
Steil's initiative is just one part of a large-scale offensive on prediction markets. The Senate is already advancing the Public Integrity in Financial Prediction Markets Act, and the House of Representatives is promoting the PREDICT Act. Both aim to combat insider trading on any platforms. Earlier, the Senate separately banned senators and their staff from betting on prediction markets.
The market operators themselves, feeling the pressure, are taking preventive measures. Kalshi launched a risk assessment and employment verification system in June, while Polymarket brought in Chainalysis to build an on-chain monitoring system. It is clear that the industry recognizes the threat and is trying to save face.
My analysis: This is a landmark moment. Prediction markets have long existed in a "gray zone," and regulators are now finally paying close attention to them. Although fighting insider trading is a noble cause, the very fact of such intense scrutiny from Congress could slow down the development of the entire industry. The key question is whether lawmakers will find a balance between the necessary protection against manipulation and preserving the innovative potential of these platforms. If the law is passed, it will set a precedent that other countries may also adopt.