Key Highlights
- Congress members, senior officials, and the president would face prediction market trading bans under new legislation
- Penalties include a 10% fine on trade value plus mandatory return of all profits to federal coffers
- Legislation emerges after questionable wagers on Iran military action generated more than $1 million in gains
- Kalshi endorses the proposed legislation; Polymarket remains silent on the matter
- Both trading platforms revised internal policies Monday before bill introduction
A new bipartisan legislative effort aims to prevent politicians and high-ranking government officials from participating in prediction market wagering. Known as the PREDICT Act, the legislation comes from Representative Nikki Budzinski, an Illinois Democrat, working alongside Representative Adrian Smith, a Nebraska Republican.
The proposed law specifically addresses platforms such as Polymarket and Kalshi, where participants wager on political developments, governmental decisions, and policy outcomes.
The PREDICT Act would prohibit congressional representatives, the president, vice president, and appointed political officials from engaging in these marketplace activities. The restriction encompasses immediate family members, including spouses and dependent children.
Violators would incur financial penalties amounting to 10% of their total transaction value. Additionally, they must surrender all earnings directly to the US Treasury.
Concerns about questionable trading patterns motivated the legislative proposal. A limited group of traders secured profits exceeding $1 million on Polymarket through wagers predicting the exact timing of US military strikes against Iran.
In a separate incident from earlier this year, an unidentified trader earned over $400,000 by wagering on Venezuelan President Nicolas Maduro’s departure from power, placing the bet mere hours before a US military intervention aimed at his removal.
Budzinski expressed concerns that individuals with classified government intelligence might be exploiting their privileged access for financial gain through prediction markets.
Expanding Legislative Momentum
The PREDICT Act represents just one component of multiple legislative initiatives targeting prediction markets unveiled in recent weeks. Senator Chris Murphy and colleagues presented legislation prohibiting all wagering on terrorism, armed conflict, and political assassinations. Senators Jeff Merkley and Amy Klobuchar put forward the End Prediction Market Corruption Act during early March.
Monday saw Senators John Curtis and Adam Schiff unveil additional bipartisan legislation aimed at banning sports and casino-type betting contracts on CFTC-regulated prediction market platforms.
State governments have also taken action, with 11 states filing legal challenges against prediction markets and two additional states pursuing ongoing litigation.
Platform Reactions and Policy Updates
Kalshi announced it currently prohibits insider trading by government personnel and characterized the legislation as a “welcome measure.” The platform expressed support for establishing uniform industry standards.
Polymarket declined to provide commentary on the proposed legislation.
Both platforms implemented revised internal policies Monday. Kalshi revealed enhanced screening procedures preventing politicians from trading on their own electoral campaigns and blocking athletes from wagering on their respective sports. Polymarket instituted bans on trades utilizing stolen or confidential intelligence and transactions from individuals capable of influencing event outcomes.
Budzinski confirmed ongoing discussions between her office and prediction market industry representatives as the legislation advances.
The PREDICT Act designates the House Ethics Committee as the enforcement body for investigating potential violations. Budzinski noted that bipartisan backing improves the legislation’s prospects for approval in both the Republican-majority House and Senate.
The proposed law maintains certain freedoms for political staff members. A congressional chief of staff could continue wagering on sporting events like March Madness tournaments while being prohibited from betting on governmental policy matters such as federal agency reopening timelines.
