U.S. authorities are targeting prediction markets: lawmakers may be banned from betting on Kalshi and Polymarket
The American legislative process is entering a new phase of confrontation with rapidly growing prediction markets. Wisconsin Republican and Chairman of the House Committee on Administration, Bryan Steil, has introduced the Stop Lawmakers from Predicting Act. The document directly prohibits members of Congress, their spouses, and minor children from using platforms for betting on political outcomes and government decisions.
This move is not an isolated initiative but part of a systemic pressure on the industry. The reason for such a harsh measure stems from obvious risks: lawmakers, having access to confidential information, could gain an unfair advantage over ordinary market participants. Essentially, this is about combating insider trading in a new, digital guise.
What exactly does the bill prohibit and what are the consequences
The new bill builds on ideas laid out in the Stop Insider Trading Act, which the committee approved back on January 14. Steil emphasizes that the main goal is to restore trust in public officials. Americans must be confident that their elected representatives are writing laws, not betting on them.
The ban applies exclusively to political wagers: election outcomes, government actions, and specific state decisions. Sports events and other non-political markets remain outside the scope of the law. Violators face a serious fine — $2,000 or 10% of the bet amount (whichever is greater). All profits earned must be returned. Moreover, it will be impossible to pay the fine using official funds, Senate budget, or political donations. Debtors, even those who have resigned, may be referred to the Department of Justice for civil action.
Platforms prepare, Congress tightens control
Steil's initiative is just the tip of the iceberg. In March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced their own project — the Public Integrity in Financial Prediction Markets Act, aimed at combating trading of confidential information on any platform. In the House of Representatives, the PREDICT Act is moving forward in parallel with similar measures for officials' families. Earlier, the Senate already passed a separate decision banning prediction market bets for senators and their staff.
Market operators themselves, aware of the pressure, are taking proactive steps. Back in June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to weed out insiders. Polymarket, in turn, has brought in Chainalysis and is building an on-chain monitoring system.
Analyst's opinion. This is a landmark moment for the entire industry. Prediction markets, especially those based on blockchain, have positioned themselves as a tool for decentralized information gathering. However, the reality is that without clear rules of the game, they risk turning into a tool for insider manipulation. The adoption of such laws is inevitable, and this is not a "crypto ban" but an attempt to integrate a new class of assets into the existing legal framework. The only question is how flexible these frameworks will be and whether they will stifle innovation in its infancy.