U.S. lawmakers are preparing a ban on betting in Kalshi and Polymarket: a new blow to prediction markets
American lawmakers may soon lose the ability to profit from political events through platforms like Kalshi and Polymarket. 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 betting on the outcomes of political decisions and government events.
What the Legislative Initiative Entails
The main motive is to prevent the use of insider information. Steil argues that lawmakers, having access to confidential data, could gain an unfair advantage over ordinary market participants. "Americans should be confident that their congressman is not profiting from insider information. Lawmakers should write laws, not bet on their outcomes," the politician stated.
The bill builds on ideas from the earlier Stop Insider Trading Act, approved by the committee on January 14. The new document covers not only members of Congress but also their immediate family members. Bets on specific government decisions, official actions, and political event outcomes are prohibited. Violations carry a fine of $2,000 or 10% of the bet amount (whichever is greater). Any profits must be returned. Notably, the fine cannot be paid using official funds, Senate budgets, or political donations. If a violator resigns without settling the debt, the case may be referred to the Department of Justice for a civil lawsuit. Sports betting and other non-political events are not affected by the law.
Widespread Pressure on Prediction Markets
Steil's initiative is part of a broader campaign. 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 trading on any platform. Simultaneously, the PREDICT Act is advancing in the House with similar measures for the families of officials. Earlier, the Senate separately banned senators and their staff from trading 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, in turn, has partnered with Chainalysis and is building an online monitoring system.
Analyst Comment: Prediction markets are a powerful tool for gathering information and hedging risks, but their political segment is becoming a battleground for ethics and transparency. If the bill passes, we will see not just stricter rules for congressmen but a precedent that could reshape the entire regulatory framework for decentralized platforms in the U.S. Players should prepare for market fragmentation: political contracts may go underground or fully migrate to jurisdictions with more favorable regulations.