US lawmakers are preparing a ban on betting on Polymarket and Kalshi: a new law against insider trading on prediction markets
U.S. Congressman Bryan Steil, a Republican from Wisconsin and Chairman of the House Committee on Administration, has introduced the Stop Lawmakers from Predicting Act. The bill aims to prevent the use of non-public information for profit on prediction platforms such as Kalshi and Polymarket.
The primary motivation behind the initiative is the urgent need to restore public trust in government officials. As rightly noted, lawmakers should be writing laws, not betting on their outcomes using insider information unavailable to ordinary market participants. This is not just a matter of ethics but a fundamental principle of the integrity of the political system.
What exactly does the new bill prohibit?
The document expands on the provisions of the earlier Stop Insider Trading Act, which was approved by the committee on January 14. The new bill imposes a direct ban on betting for members of Congress, their spouses, and minor children. The ban applies exclusively to political events: specific government decisions, actions of authorities, and election outcomes. Sports and other non-political bets are not covered by the law.
Violators face a significant fine — $2,000 or 10% of the bet amount, whichever is greater. Additionally, all profits gained must be returned. Notably, the penalty collection procedure stipulates that the fine cannot be paid using official expenses, Senate funds, or political donations. In case of non-payment, the case is referred to the U.S. Department of Justice for a civil lawsuit, even if the congressman has already ended their career or resigned.
Platforms and Congress prepare for new rules
Steil's bill is just one part of a broader crackdown on insider trading in the predictive markets sector. In March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced their own proposal — the Public Integrity in Financial Prediction Markets Act, aimed at combating the trading of non-public information on any platform. The House of Representatives also has a similar initiative — the PREDICT Act, which proposes comparable measures for the families of officials. The Senate has already separately banned senators and their staff from betting on prediction markets.
The market operators themselves are not waiting idly. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket, in turn, has partnered with Chainalysis and is building an on-chain monitoring system. This shows that the platforms are aware of the risks and are preparing for stricter regulation.
My analysis: Steil's initiative is an important step toward the civilized regulation of prediction markets, which are rapidly gaining popularity. However, the key question lies in the effectiveness of oversight. Will the mechanism be able to track bets made through proxies or cryptocurrency mixers? I am confident that the passage of the law will only mark the beginning of a long struggle for transparency, and prediction markets will have to adapt to new realities faster than they planned.