A group of House Democrats is pushing a new bill that would stop federal officials from betting on prediction markets, saying the practice looks a lot like insider trading.
The proposed law is called the Public Integrity in Financial Prediction Markets Act of 2026. If it passes, it would ban elected officials, political appointees, executive branch employees, and congressional staff from buying or selling prediction market contracts when those bets are tied to government actions, policies, or political outcomes.
The main concern is inside information. Lawmakers behind the bill say people working inside the government often have access to information the public doesn’t. Letting them bet on future events creates a clear conflict of interest.
The effort is being led by Representative Ritchie Torres of New York, along with former House Speaker Nancy Pelosi. Torres didn’t hold back, saying that prediction markets mixed with government power have become a breeding ground for corruption. He warned that insider trading and self-dealing are no longer theoretical risks but real ones happening in plain sight.
The bill gained momentum after reports of a large payout — around $400,000 — on a Polymarket bet tied to the possible removal of Venezuelan President Nicolás Maduro. Critics say those trades may have been fueled by privileged knowledge about U.S. government actions.
Supporters of the bill, including Senator Chris Murphy, argue this is no different from insider-trading rules in the stock market. If officials can influence or know about upcoming decisions, they shouldn’t be allowed to profit from them.
Interestingly, even some people in the prediction market industry support the move. Kalshi CEO Tarek Mansour said his platform already bans insider trading, adding that loosely regulated or decentralized platforms raise serious fairness concerns.
Not everyone agrees with the bill. Critics argue prediction markets can be useful tools that help surface information and forecast outcomes more accurately. But lawmakers backing the legislation say the risk to public trust is too high when government insiders can profit from political or policy events.
At its core, this bill shows how fast-growing financial technology is colliding with old rules about ethics and power — and lawmakers are trying to draw clearer lines before things get worse.
