U.S. authorities are preparing a ban on political betting for members of Congress: Kalshi and Polymarket in the crosshairs
The American prediction market is once again at the epicenter of a legislative storm. A bill has been introduced in Congress that directly prohibits members of the House of Representatives and the Senate, their spouses, and minor children from using platforms for betting on political outcomes. The initiative, named the "Stop Lawmakers from Predicting Act," targets industry giants such as Kalshi and Polymarket.
Essence of the Bill: Combating Insider Trading in Prediction Markets
The author of the document is the Chairman of the House Administration Committee, Republican Brian Steil from Wisconsin. His main motivation is to prevent a situation where lawmakers could profit from non-public information unavailable to ordinary market participants. Essentially, this is a logical extension of the broader Stop Insider Trading Act, which was approved by the committee back on January 14.
"Americans should be confident that their congressman is not profiting from insider information. Lawmakers should write laws, not bet on their outcomes," Steil stated.
The ban applies to bets concerning specific government decisions, official actions, and outcomes of political events. Violators face a fine of $2,000 or 10% of the bet amount, whichever is greater. Profits obtained from illegal wagers must be returned. Notably, it will be impossible to pay the fine using official funds, Senate budget, or political donations. Those who leave office without settling the debt may be referred to the Department of Justice for a civil lawsuit. Sports betting is not affected by the law.
Large-Scale Attack on Prediction Markets
Steil's bill is just one part of a systemic pressure on the industry. Back 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 on non-public information on any platform. In the House of Representatives, the PREDICT Act is being advanced in parallel, with similar measures for the families of officials. Additionally, the Senate has already separately banned senators and their staff from betting on prediction markets.
The platforms themselves, aware of the risks, have begun to act proactively. As early as June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket, in turn, has integrated Chainalysis and is building an on-chain monitoring system.
My analysis: This is a landmark moment for the entire crypto industry. We are witnessing regulators probing the pain points of decentralized prediction markets. If the laws pass, it will create a precedent that could either force Polymarket and Kalshi into strict KYC/AML frameworks or, conversely, push them toward full decentralization to escape U.S. jurisdictional control. In any case, trust in these markets as a tool for hedging political risks could suffer significantly in the short term.