The U.S. Congress is preparing a ban on betting in Kalshi and Polymarket: a new blow to prediction markets
A legislative attack on political prediction markets is gaining momentum in Washington. House Administration Committee Ranking Republican Member Bryan Steil has introduced a bill called the Stop Lawmakers from Predicting Act. The document directly prohibits members of Congress, their spouses, and minor children from using platforms like Kalshi and Polymarket to bet on the outcomes of political events and government decisions.
The initiative did not arise in a vacuum. It is a logical continuation of the Stop Insider Trading Act, passed on January 14. The main motive is conflict of interest. Lawmakers have access to confidential information unavailable to ordinary market participants. Betting on politics using such insider knowledge creates obvious risks of manipulation and undermines trust in government institutions.
What exactly is prohibited and what are the penalties?
Steil's bill is extremely specific. It prohibits wagers on specific votes, government actions, and the outcomes of political events. Violators face a serious fine: $2,000 or 10% of the bet amount—whichever is greater. Illegally obtained profits are subject to confiscation. Moreover, the fine cannot be paid using official funds, Senate budget allocations, or political donations. Those who resign without settling the debt may be referred to the Department of Justice for a civil lawsuit.
An important nuance: the law exclusively concerns political predictions. Bets on sports or other non-political events remain outside its jurisdiction.
Multiple fronts of attack and platform reactions
This is just part of a broader campaign. As early as March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced their own bill—the Public Integrity in Financial Prediction Markets Act—aimed at combating insider trading on any platform. In the House of Representatives, the PREDICT Act is being advanced in parallel, with similar measures for the families of government employees. Earlier, the Senate separately banned its members and staff from trading on prediction markets.
The market operators themselves are not sitting idle. In June, Kalshi implemented a risk assessment system, employment verification, and whistleblower channels to filter out insiders. Polymarket, for its part, has brought in Chainalysis and is building an on-chain monitoring system to detect suspicious activity.
Cryptalist Analysis: We are witnessing not just scattered initiatives, but systemic pressure on the political prediction industry. Prediction markets are a powerful tool for information aggregation, but their vulnerability to insider information is obvious. If these bills are passed, it will set a precedent and could seriously limit the liquidity and appeal of such platforms for institutional players. The question is not whether lawmakers' bets will be banned, but how quickly and effectively markets can adapt to new compliance realities.