U.S. lawmakers are preparing a ban on betting through Polymarket and Kalshi: a new law against insider trading.
Another legislative blow to prediction markets is brewing in Washington. Republican Brian Steil, Chairman of the House Committee on Administration, has introduced a bill called the Stop Lawmakers from Predicting Act. The document directly prohibits members of Congress, their spouses, and minor children from betting on political outcomes and government decisions using platforms like Kalshi and Polymarket.
The initiative is a direct continuation of the fight against insider trading. Steil, who previously advanced the Stop Insider Trading Act, which the committee approved on January 14, stated that Americans must be confident that their elected officials are not profiting from non-public information. According to him, the job of lawmakers is to write laws, not to bet on them.
What exactly is prohibited
The bill covers bets on specific government decisions, actions by authorities, and results of political events. Violations carry a fine — either $2,000 or 10% of the bet amount, whichever is greater. Any profits gained from such a transaction must be returned. An important nuance: the fine cannot be paid using official funds, Senate accounts, or political donations. If the violator resigns without settling the debt, the case will be referred to the Department of Justice for a civil lawsuit. Sports betting and other non-political events are not affected by the law.
Context: pressure is mounting from all sides
Steil's bill is just one part of a broader crackdown. 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 insider trading 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 senators and their staff from betting on prediction markets.
The platforms themselves are also preparing for new realities. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to filter out insiders. Polymarket, in turn, has brought in Chainalysis and is building an on-chain monitoring system.
My analysis: Prediction markets are a powerful tool for hedging and information aggregation, but their political segment is becoming a minefield. Lawmakers with access to non-public data indeed create a unique risk of manipulation. However, a ban at the level of Congress members is only the first step. The question is how far regulation will go and whether it will harm bona fide market participants who use these platforms for objective analysis, not for profit. For now, the industry is showing a willingness to comply, but the upcoming battles in Congress could change the landscape forever.