U.S. lawmakers are preparing a ban on betting on Polymarket and Kalshi: a new law against insider trading
The regulatory battle surrounding prediction markets in the US is escalating. Wisconsin Republican and Chairman of the House Committee on Administration, Bryan Steil, has introduced the Stop Lawmakers from Predicting Act. The bill directly prohibits members of Congress, their spouses, and minor children from wagering on the outcomes of political events and government decisions through platforms like Kalshi and Polymarket.
What is the essence of the initiative?
The key motivation is combating insider trading. Lawmakers have access to confidential information unavailable to ordinary market participants. Steil emphasizes: "Americans must be confident that their congressman is not profiting from insider information. Lawmakers should be writing laws, not betting on their outcomes." The bill is a logical extension of the Stop Insider Trading Act, which the committee approved on January 14.
The ban applies to bets on specific votes, government actions, and outcomes of political events. Violators face a fine of $2,000 or 10% of the bet amount—whichever is greater. Any profits gained must be returned. Notably, the fine cannot be paid using official expenses, Senate funds, or political donations. Those who resign without settling the debt may be referred to the US Department of Justice for a civil lawsuit. Bets on non-political events, such as sports, are not affected by the law.
Pressure mounts from all sides
Steil's initiative is just part of a broader crackdown. 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 trading on confidential information on any platform. In the House of Representatives, the PREDICT Act is moving forward in parallel with similar measures for the families of officials. Earlier, the Senate separately banned its members and staff from betting on prediction markets.
Platform operators themselves are also preparing for stricter rules. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket has brought in Chainalysis and is building an online monitoring system. Whether the final document will be adopted largely depends on agreements between Republicans and Democrats—similar initiatives are advancing in both the Senate and the House of Representatives.
My analysis: This is not just a fight against insider trading—it is a signal for the entire decentralized finance industry. Prediction markets, especially those on blockchain, have long existed in a "gray" zone. Now, regulators are making it clear: if a platform touches politics, it will be subject to the same oversight as traditional financial markets. Polymarket and Kalshi will either have to radically change their user verification models or restrict functionality for US residents. Investors should closely monitor developments—this could significantly impact the liquidity and volumes of these protocols.