US lawmakers have introduced a bill aimed at banning members of the US Congress, the president and other senior government officials from placing bets on prediction markets.
The proposed bill, a bipartisan effort by U.S. Rep. Adrian Smith and Rep. Nikki Budzinski, was introduced Tuesday and is called the Preventing Real-Time Exploitation and Fraudulent Trading in Congressional Confidential Information Act (PREDICT Act).
“In recent months, we have seen cases of little-known traders making huge profits on events ranging from the war with Iran to the duration of the government shutdown, which raises necessary questions about insider trading,” Budzinski said.
The move comes amid growing scrutiny of prediction markets in the U.S., where lawmakers and regulators are focusing on platforms like Kalshi and Polymarket for contracts related to sports, war and politics.
The bill seeks to prevent members of Congress, the president, vice president and political appointees from betting on “the outcomes of political events, policy decisions and other government actions in prediction markets.” This also applies to spouses and dependents of these public officials.
Potential penalties listed in the PREDICT Act include a 10% fine on the total contract value and forfeiture of all profits to the U.S. Treasury.
Commenting on the draft bill, Budziński emphasized the importance of closing legal loopholes so that people with confidential knowledge “cannot benefit from it.”
Budziński is not the only one who speaks out about alleged corruption in forecasting markets. Earlier this month, two Democratic lawmakers introduced a separate bill called the Prohibition of Trading in Events on Sensitive Federal Operations and Functions (BETS OFF) Act.
Speaking about the bill, Senator Chris Murphy alleged that it was likely that people were using “insider information” to place bets on US President Donald Trump’s military actions involving Iran.
US lawmakers are turning up the heat on forecasting markets
U.S. lawmakers aren’t the only ones raising concerns about insider trading in prediction markets. Recently, sports-related contracting has gained attention at both the federal and state levels.
Cointelegraph reported earlier this week that 11 states have taken legal action against prediction markets, while legal action is also underway in two more states.
At the federal level, it makes sense. John Curtis and Adam Schiff introduced on Monday passed a bill seeking to prohibit any entity registered with the Commodity Futures Trading Commission (CFTC) from listing forecast contracts on an exchange that resemble “sports betting or casino-style gaming.”
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The senators argued that many companies offer significant amounts of contracts “that are indistinguishable from gambling” and also attacked the CFTC for its approach to the sector.
“For fifteen years, the CFTC has enforced its authority to prohibit the listing on an exchange of contracts that relate to, refer to, or refer to gaming. However, the CFTC and its Chairman have abruptly changed course – intervening in ongoing litigation and continuing to craft rules to significantly relax the CFTC’s enforcement of this clause,” they said.
Following this move, both Kalshi and Polymarket, the two largest prediction market platforms, have made efforts to tighten their rules to prevent professional athletes and political candidates from placing bets on prediction markets.
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