Congressmen in the Crosshairs: The U.S. Prepares a Total Ban on Betting for Officials in Prediction Markets
A regulatory guillotine is hanging over political prediction markets. The Stop Lawmakers from Predicting Act has been introduced in the House of Representatives, imposing a direct ban on members of Congress, their spouses, and minor children from using platforms like Kalshi and Polymarket to bet on the outcomes of political events and government decisions.
The bill was initiated by Wisconsin Republican Bryan Steil, who chairs the House Committee on House Administration. The main motivation is to prevent lawmakers from financially benefiting from insider information that is unavailable to ordinary market participants. Essentially, this is an attempt to close a loophole for insider trading in a specific segment of decentralized finance.
What exactly the new law prohibits
The document is a logical continuation of the Stop Insider Trading Act, which was approved by the committee on January 14. As Steil himself stated, the new initiative is designed to restore trust in public officials. The essence is crystal clear: lawmakers should write laws, not bet on their outcomes.
"Americans must be confident that their congressman is not profiting from insider information," Steil emphasized.
The ban applies to bets concerning 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. Additionally, all profits obtained must be returned. It will be impossible to pay the fine using official funds, Senate budget, 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. Notably, bets on non-political events, such as sports, are not subject to the law.
Platforms and Congress prepare for new rules
Steil's bill is just part of a broader campaign to tighten control. In March, Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced their own proposal—the Public Integrity in Financial Prediction Markets Act—aimed at combating trading of confidential information on any platform. In the House of Representatives, the PREDICT Act is moving forward in parallel with similar measures for officials' families. Earlier, the Senate separately banned prediction market betting for senators and their staff.
Whether the final document will be adopted largely depends on bipartisan agreements. However, the trend itself is clear: both Republicans and Democrats see a threat in mixing political power with financial speculation on predictions. Significantly, the market operators themselves are preparing for the new realities. As early as June, Kalshi launched a risk assessment system, employment verification, and whistleblower channels to prevent insiders from accessing the platform. Polymarket, in turn, has integrated Chainalysis and is building an on-chain monitoring system.
Expert commentary from Cryptalist: Prediction markets are a powerful tool for information aggregation, but their Achilles' heel is vulnerability to manipulation by those with privileged access to data. This initiative is not just about combating insider trading; it is an attempt to preserve the legitimacy of the platforms themselves. If Congress cannot prove it has the situation under control, regulators may go further—up to a complete ban on political contracts. This would be a serious blow to the entire industry, as political outcomes generate the bulk of liquidity and interest.