Congressmen in the crosshairs: the US is preparing a ban on betting for politicians via Kalshi and Polymarket
The regulatory battle surrounding prediction markets in the United States is escalating. Wisconsin Republican Bryan Steil, who chairs the House Committee on Administration, has introduced the "Stop Lawmakers from Predicting Act." The bill is directly aimed at prohibiting members of Congress, their spouses, and minor children from betting on political outcomes using platforms like Kalshi and Polymarket.
Core of the Initiative: Fear of Insider Trading
The main motive is to prevent the abuse of non-public information. Lawmakers with access to confidential data could gain an unfair advantage over ordinary market participants. As Steil rightly noted, "Americans should be confident that their congressman is not profiting from insider information. Lawmakers should be writing laws, not betting on their outcomes."
The bill expands on the provisions of the "Stop Insider Trading Act," which was previously approved by the committee on January 14. The ban covers bets on specific government decisions, official actions, and outcomes of political events. The penalty for violations is up to $2,000 or 10% of the bet amount (whichever is greater), plus forfeiture of all profits earned. Notably, the fine cannot be paid using official funds, Senate budget allocations, or political donations. If unpaid after leaving office, the case is referred to the Department of Justice for a civil lawsuit. Sports and other non-political events are not subject to the law.
Coordinated Efforts and Platform Reactions
This is not an isolated initiative. In March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced their own bill — the "Public Integrity in Financial Prediction Markets Act" — also aimed at combating trading on non-public information. In the House of Representatives, the "PREDICT Act" is moving forward in parallel, with similar measures targeting the families of officials. Previously, the Senate had already separately banned senators and their staff from betting on prediction markets.
Platforms, in turn, are trying to preempt regulatory blows. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels. Polymarket has partnered with Chainalysis and is building an on-chain monitoring system.
My analysis: The trend is clear — prediction markets are becoming a battleground for ethics and transparency. Given that similar bills are advancing in both the Senate and the House, there is a high likelihood of a unified package of measures being adopted. This could significantly limit the liquidity of political contracts, but simultaneously increase trust in them from institutional players. The key question is how effectively "insider" bets can be separated from the good-faith analysis of public information.