A sitting member of Congress has introduced legislation banning congressional staff from trading on prediction markets platforms, continuing a flurry of bipartisan legislative activity that has produced at least six separate bills since January 2026 targeting the industry’s intersection with inside information. The move reflects growing institutional discomfort with a market structure that, by design, evaluates policy outcomes – and therefore creates direct financial incentives for those with privileged access to trade in government decision-making.
We believe this latter proposition is less about prediction markets as a financial instrument and more about the growing awareness that existing ethical frameworks, built around actions and not event-driven contracts, are structurally unsuitable for the current regulatory environment. The STOCK Act was not written with Kalshi in mind.
Public Integrity in Financial Forecasting Markets Act: provisions and scope of application
Representative Ritchie Torres (D-NY) introduced the Public Integrity in Financial Forecasting Markets Act in January 2026, targeting federal elected officials, political appointees, executive branch personnel, and congressional staff.
The bill prohibits exchanges of findings related to nonpublic information accessed in the course of official functions – a narrower construction than blanket prohibitions proposed elsewhere, but one that directly addresses the mechanism of potential abuse. Torres called the legislation “not a cap, but a floor” for federal regulation of the industry.
Rep. Seth Moulton bans staff from using prediction markets like Kalshi and Polymarket
–CNBC (@CNBC) March 25, 2026
The bill sits next to a very busy legislative field. Senators Jeff Merkley (D-OR) and Amy Klobuchar (D-MN) have proposed the End Prediction Market Corruption Act, which would outright ban the president, vice president, and members of Congress from trading on any prediction market platform. Senator Chris Murphy (D-CT) and Representative Greg Casar (D-TX) introduced the BETS OFF Act, prohibiting event-driven transactions on sensitive operations and federal functions, targeting contracts on terrorism, assassinations, war, and government actions deemed controllable by insiders.
The bipartisan Event Contract Enforcement Act, sponsored by Rep. Blake Moore (R-UT) and Rep. Salud Carbajal (D-CA), directs the Commodity Futures Trading Commission (CFTC) to prohibit contracts related to terrorism, sports, and illegal activities; Moore described it as ensuring that markets “can continue to serve legitimate business interests while protecting Americans from risk.”
None of these bills come close to a floor vote, and the Trump administration’s stance toward prediction markets has been permissive rather than restrictive — a tension that significantly complicates the legislative calculus.
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The market for predictions and the problem of inside information
The regulatory context for this legislative push is explained by the CFTC’s contested relationship with event-driven contracts. The agency fined Polymarket $1.4 million in January 2022 and forced the platform to block U.S. users following a cease and desist action. Kalshi’s subsequent legal challenge to the CFTC’s rejection of the Congressional monitoring contracts resulted in a September 2024 DC District Court ruling that the election contracts did not constitute “gambling” – a ruling that significantly expanded the legal operating space for U.S.-oriented prediction platforms and prompted the current legislative response.
The central unanswered question remains whether Congress can construct a viable insider trading framework for event contracts – instruments that are neither securities nor futures contracts in the conventional sense – without first resolving the CFTC’s jurisdictional mandate over them.
Prediction markets are one of the most exciting innovations in financial markets. However, for too long, the @CFTC failed to provide insight into these markets used by millions of Americans. It ends today.
Read the measures taken by the agency here⬇️…
– Mike Selig (@ChairmanSelig) March 12, 2026
The problem of insider trading is not hypothetical. A $400,000 deposit into a new Polymarket account, timed with the capture of former Venezuelan President Nicolás Maduro by U.S. forces, illustrated this revelation with uncomfortable precision. Responses at the platform level have been partial: Kalshi has blocked politicians and athletes from betting on their own campaigns or events, while Polymarket has pledged to curb insider trading — measures that Congress has publicly called insufficient in the absence of federal mandates.
The scale of cryptographic infrastructure compounds the compliance challenge. Polymarket settles USDC contracts on Polygon, meaning any federal trading ban for covered officials would involve on-chain activity that existing brokerage reporting frameworks cannot capture. A staff member in a position at Polymarket does not generate a Form 1099-B that a compliance officer can audit in the conventional sense.
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Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article is intended to provide accurate and current information, but should not be considered financial or investment advice. Because market conditions can change quickly, we encourage you to verify the information for yourself and consult a professional before making any decisions based on this content.
Daniel Frances is a technical writer and Web3 educator specializing in macroeconomics and DeFi mechanics. Hailing from crypto since 2017, Daniel leverages his experience in on-chain analytics to write evidence-based reports and in-depth guides. He holds certifications from the Blockchain Council and is dedicated to providing “insight gain” that overcomes market hype to find real utility for blockchain.
