U.S. lawmakers are preparing a ban on betting in Kalshi and Polymarket: a new ethical boundary
The regulatory battle surrounding prediction markets in the United States is entering a new phase. A Republican congressman from Wisconsin, who chairs the House Committee on Administration, has introduced the Stop Lawmakers from Predicting Act. This bill explicitly prohibits members of Congress, their spouses, and minor children from placing monetary bets on political events and government decisions using platforms such as Kalshi and Polymarket.
The key motive behind the initiative is to prevent conflicts of interest. Lawmakers with access to confidential information could gain an unfair advantage in prediction markets by manipulating outcomes or using insider data. As I have repeatedly emphasized in my analyses, prediction markets are becoming increasingly influential, making the issue of ethical regulation inevitable.
What exactly the bill prohibits
The new document builds on the provisions of the Stop Insider Trading Act, which was approved by the committee as early as January 14. The ban covers bets related to specific government decisions, actions by authorities, and outcomes of political events. Violations carry a significant fine: $2,000 or 10% of the bet amount—whichever is greater. Any profits obtained from an illegal bet must be fully returned.
Importantly, the fine cannot be paid using official expenses, Senate funds, or political donations. Moreover, those who resign or end their careers without paying the fine may be referred to the U.S. Department of Justice for civil litigation. The law does not affect bets on non-political events, such as sports.
Platforms and Congress prepare for new rules
Steil's bill is just one part of a broader push toward tighter control. In March, senators introduced their own proposal—the Public Integrity in Financial Prediction Markets Act—while the House is considering the PREDICT Act. The Senate itself previously passed a separate resolution banning senators and their staff from betting on prediction markets.
Notably, market operators are not waiting idly. As early as June, Kalshi launched a risk assessment system, employment verification checks, 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: Prediction markets are moving from a gray area into a fully regulated segment. While this may mean greater transparency for ordinary traders, for politicians it means a complete ban on participation. This is logical: you cannot simultaneously write laws and bet on their outcomes. I believe we will see a compromise version passed before the end of the current congressional session.