Key Highlights
- Proposed legislation would prohibit members of Congress, senior executives, and the president from participating in prediction market trading
- Penalties include a 10% penalty fee plus mandatory return of all profits to federal coffers
- Legislation emerged after questionable wagers on Iranian military action generated over $1 million in profits
- Kalshi has expressed backing for the proposed law; Polymarket remains silent
- Both trading platforms implemented new internal policies on Monday before the bill’s introduction
A bipartisan coalition in Washington has unveiled new legislation designed to prevent elected officials and high-ranking government employees from participating in prediction market wagering. Dubbed the PREDICT Act, the proposed law comes from Representative Nikki Budzinski of Illinois (Democrat) and Representative Adrian Smith of Nebraska (Republican).
🚨NEW: @Kalshi strengthens prediction market integrity:
New tech preemptively blocks politicians, athletes, and sports personnel from trading on markets they’re involved in.
Whistleblower tools and league cooperation added to prevent insider trading and manipulation. pic.twitter.com/R0bRntQhyQ
— The Crypto Times (@CryptoTimes_io) March 24, 2026
The legislation specifically addresses concerns about platforms such as Polymarket and Kalshi, which allow participants to wager on political developments, legislative outcomes, and governmental decisions.
The PREDICT Act would impose restrictions on congressional representatives, both the president and vice president, along with appointed political officials from engaging in such trading activities. These prohibitions would also apply to their married partners and financially dependent offspring.
Violators would face monetary penalties equivalent to 10% of their transaction value. Additionally, they must forfeit all earnings to the United States Treasury.
The legislative push stems from troubling patterns in betting behavior. A limited group of participants earned more than $1 million on Polymarket through wagers predicting the exact timing of American military strikes against Iran.
In a separate incident earlier this year, an unidentified participant profited over $400,000 by wagering that Venezuelan leader Nicolas Maduro would exit power, placing the bet mere hours before a US military intervention targeting his removal.
Budzinski expressed concern that these instances suggest individuals with privileged access to classified government intelligence may be exploiting that information for financial gain through prediction markets.
Mounting Legislative Pressure
The PREDICT Act represents just one component of multiple legislative efforts addressing prediction markets introduced during recent weeks. Senator Chris Murphy joined colleagues in proposing legislation that would ban all wagering related to terrorism, military conflicts, and political assassinations. Senators Jeff Merkley and Amy Klobuchar put forward the End Prediction Market Corruption Act during March.
This past Monday saw Senators John Curtis and Adam Schiff present another bipartisan measure aimed at prohibiting sports and gambling-style contracts on CFTC-registered prediction market services.
Beyond federal action, eleven state governments have initiated legal proceedings against prediction market operators, while two additional states have litigation in progress.
Platform Reactions and Policy Changes
Kalshi stated that its existing policies already prohibit insider trading by government personnel and described the proposed law as a “welcome measure.” The company emphasized its support for establishing uniform industry standards.
Polymarket has not issued any statement regarding the proposed legislation.
Both organizations modified their internal guidelines on Monday. Kalshi unveiled enhanced verification procedures preventing politicians from wagering on their own electoral contests and blocking athletes from betting on competitions in which they participate. Polymarket prohibited transactions based on misappropriated or confidential data and banned trades from individuals capable of directly influencing event outcomes.
Budzinski indicated her office has maintained ongoing dialogue with prediction market industry representatives as the legislation advances.
The PREDICT Act establishes the House Ethics Committee as the enforcement body for suspected violations. The bipartisan nature of the bill, according to Budzinski, improves its prospects for passage in both the Republican-majority House and Senate.
The proposed law does not completely prohibit political staff members from all prediction market activity. For example, a chief of staff could continue wagering on sporting events like collegiate basketball tournaments while being barred from betting on governmental policy matters such as federal agency operational decisions.
