The U.S. Congress is preparing a ban on betting in Polymarket and Kalshi: a new blow to prediction markets
A regulatory guillotine is hanging over political prediction markets. A bill has been introduced in the United States that directly prohibits members of Congress, their spouses, and minor children from betting on the outcomes of political events and government decisions. The initiative, named the "Stop Lawmakers from Predicting Act," targets platforms such as Kalshi and Polymarket.
The author of the document is Republican Bryan Steil, who chairs the House Administration Committee. The key motive is concern that lawmakers, having access to non-public information, could gain an unfair advantage over ordinary market participants. Essentially, this is a direct fight against insider trading in a specific market.
What exactly does the bill prohibit?
The new document is a logical continuation of the Stop Insider Trading Act, which the committee approved back on January 14. As Steil emphasizes, the initiative aims to restore trust in public officials. "Americans should be confident that their congressman is not profiting from insider information. Lawmakers should write laws, not bet on their outcomes," he stated.
The ban applies to bets related to specific government decisions, actions of authorities, and outcomes of political events. Violators face a fine of $2,000 or 10% of the bet amount—whichever is greater. Any profits obtained must be returned. Notably, the fine cannot be paid using official funds, Senate budgets, 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, such as sports.
Trend towards tightening: platforms prepare
Steil's bill is just part of a large-scale crackdown on prediction markets. Earlier, 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 non-public information on any platform. There is also a similar document in the House of Representatives—the PREDICT Act. Moreover, the Senate has already separately banned its members and staff from betting on prediction markets.
Notably, market operators themselves are not waiting for leniency from the law and are actively preparing for new rules. Back in June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from entering the platform. Polymarket, for its part, has brought in Chainalysis and is building an online monitoring system.
My analysis: This bill is not just a local story. It sets an important precedent for the entire DeFi sector and prediction markets. If passed, we will see not only the market being cleansed of dishonest players with privileged access but also increased regulatory pressure on platforms. Polymarket and Kalshi will either have to become models of compliance or face serious restrictions. For the industry, this is a painful but necessary stage of maturation.