Congress of the United States is preparing a ban on betting in Polymarket and Kalshi: a new law against insider trading
The American prediction market has come under the scrutiny of lawmakers. Republican Brian Steil, who chairs the House Committee on House Administration, has introduced the Stop Lawmakers from Predicting Act. The bill directly prohibits members of Congress, their spouses, and minor children from placing funds on political outcomes and government decisions through platforms such as Kalshi and Polymarket.
What is the essence of the ban?
The main motivation is to combat potential insider advantages. Lawmakers, having access to confidential information, could gain unfair profits unavailable to ordinary market participants. Steil emphasizes: "Americans must be confident that their congressman is not profiting from insider data. Lawmakers should write laws, not bet on their outcomes."
The new act builds on the previous bill — the Stop Insider Trading Act, approved by the committee on January 14. The ban applies to bets on specific government decisions, official actions, and political events. Violators face a fine of $2,000 or 10% of the bet amount — whichever is greater. Profits are subject to seizure. Notably, it will be impossible to pay the fine using official funds, Senate budget, or political donations. Unpaid debts may be referred to the Department of Justice for civil action.
Large-scale market cleanup
Steil's bill is just part of a broader trend. 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 confidential information on any platform. In the House of Representatives, the PREDICT Act is being advanced in parallel, with similar measures for officials' families. Previously, the Senate separately banned senators and their staff from betting on prediction markets.
Platform operators themselves are preparing for stricter rules. In June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders. Polymarket has integrated Chainalysis and is building an on-chain monitoring system.
Expert commentary: Prediction markets are a powerful tool for crowdsourcing information, but their Achilles' heel is vulnerability to insiders. If Congress truly wants to maintain trust in these platforms, such measures are necessary. The question is how effectively they will work in practice, given the difficulty of tracking illegal bets through cryptocurrencies and offshore jurisdictions. I think we will see not just bans, but a comprehensive KYC and AML system for all participants in political markets.