The U.S. Congress is targeting prediction markets: a new bill against insider trading on Kalshi and Polymarket
A campaign to restrict lawmakers' access to political prediction markets is gaining momentum in the United States. Wisconsin Republican and Chairman of the House Committee on Administration, Bryan Steil, has introduced the Stop Lawmakers from Predicting Act. This bill directly prohibits members of Congress, their spouses, and minor children from placing bets on political events and outcomes of government decisions using platforms like Kalshi and Polymarket.
The impetus for such decisive measures is concern that lawmakers, with access to confidential information, could gain an unfair advantage over ordinary market participants. Steil's initiative is a logical continuation of another bill — the Stop Insider Trading Act, which the committee approved on January 14. According to the author, the new law aims to restore trust in public officials, who should be writing laws, not betting on them.
What exactly the bill prohibits
The document introduces a direct ban on bets concerning specific government decisions, actions of authorities, and outcomes of political events. Violators face a significant fine: $2,000 or 10% of the bet amount — whichever is greater. Profits obtained from such transactions are subject to mandatory forfeiture. An important nuance: it will be impossible to pay the fine using official funds, Senate budget, or political donations. Those who resign without settling the debt may be referred to the U.S. Department of Justice for a civil lawsuit. The law does not affect bets on non-political events, particularly sports.
Platforms and Congress prepare for new rules
Steil's bill is just part of a broader trend toward tightening control. In 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 information trading on any platforms. There is also a House bill, the PREDICT Act, with similar measures for officials' families. Earlier, the Senate separately banned its members and staff from betting on prediction markets.
Whether the document will be adopted largely depends on bipartisan agreements, as similar initiatives are moving forward in both the Senate and the House. Market operators themselves have also stated their positions. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket has partnered with Chainalysis and is building an online monitoring system.
My analysis: This wave of regulatory initiatives is a clear signal to the market. Political predictions, especially on blockchain platforms, are ceasing to be a "gray area." We see U.S. regulators striving to establish order, and although Polymarket and Kalshi are already taking preventive steps, the final adoption of the law could radically change the landscape of this DeFi segment. Investors should closely monitor developments, as this could affect the liquidity and accessibility of these platforms.