One of the biggest priorities for prediction markets in the United States is preventing insider trading. Platforms like Kalshi and Polymarket offer a wide range of political markets, creating concerns that individuals with access to nonpublic information could gain an unfair advantage.
Prediction market leaders have spent the past several years trying to address those concerns, and now a new bill in Congress would take another step toward limiting insider trading. The legislation would ban lawmakers and their immediate family members from trading on platforms like Kalshi and Polymarket.
While the bill is still in its early stages, it appears to have momentum and is being viewed as a priority issue as prediction markets continue to expand across the United States.
The Stop Lawmakers From Predicting Act
The Stop Lawmakers From Predicting Act was introduced on Thursday by House Administration Committee Chairman Bryan Steil. Steil, a Republican from Wisconsin, has already received bipartisan support for the proposal, which is notable given today's political climate.
Under the bill, members of Congress, their spouses, and dependent children would be prohibited from trading on certain prediction markets where insider information could provide an advantage. Markets tied to sports and other non-government events would generally remain available, but lawmakers would be restricted from participating in contracts connected to information they may have access to through their official positions.
Violators would face penalties equal to either $2,000 or 10% of the prohibited transaction's value, whichever is greater, in addition to forfeiting any net gains.
When introducing the bill, Steil said, "The American people deserve to know their member of Congress is not profiting off insider information. This legislation is critical to restoring the public's trust in their elected officials. Lawmakers should be writing policy, not wagering on its outcome."
If government officials were found in violation of the law, they would be prohibited from using their Members' Representational Allowance or Senate office expense accounts to pay any fines.
The legislation would also ensure that lawmakers could not avoid penalties simply by resigning from office. Civil enforcement actions could still be pursued after their departure from Congress.
Congress Cracking Down
Steil's proposal is the latest in a broader effort to address insider trading concerns among elected officials. Earlier this year, the Committee on House Administration advanced the Stop Insider Trading Act, which focused primarily on stock market activity by members of Congress.
In April, the Senate approved a resolution that updated the chamber's internal rules to prohibit lawmakers and staff members from participating in prediction markets. At the same time, companies such as Kalshi and Polymarket have continued lobbying efforts aimed at creating a clear regulatory framework for the industry.
In addition to the Stop Lawmakers From Predicting Act, lawmakers are also considering the Prediction Market Act. That proposal would establish additional regulations for prediction market platforms while further addressing concerns surrounding insider trading and market integrity.
While several prediction market bills are currently moving through Congress, each proposal must still pass both the House and Senate before reaching President Trump's desk for signature.
The Trade Handle Prediction Markets Take
Insider trading remains one of the biggest long-term threats facing the prediction market industry. If users begin to believe that certain participants have access to privileged information, confidence in the markets could quickly erode.
That is why legislation like the Stop Lawmakers From Predicting Act could ultimately be beneficial for the industry. Strong safeguards help create a level playing field and may increase trust among traders, regulators, and lawmakers alike.
As prediction markets continue to grow in popularity, establishing clear rules around participation and insider information will be critical to ensuring the industry's long-term stability and credibility.