US Congressman Targets Prediction Markets: Could Staff Trading Be the Next Political Scandal?
Ever wonder what happens when the folks in Congress worry that their own staff might be turning insider info into cold, hard cash on prediction markets? Well, buckle up—because a sitting member of Congress just dropped a bill aiming to shut down congressional staff trading on these platforms. It’s part of a whirlwind of bipartisan moves this year, with no less than six distinct pieces of legislation popping up since January 2026, all tackling the murky crossroads of insider knowledge and political betting. The STOCK Act, which has guided ethics frameworks so far, clearly wasn’t built with today’s event contracts or platforms like Kalshi in mind—and lawmakers are realizing the old rules just don’t cut it anymore. So, is this about stopping shady bets or redefining how we keep government insiders honest in the digital age? You decide. LEARN MORE.
A sitting member of Congress has introduced legislation to prohibit congressional staff from trading on prediction markets platforms, extending a wave of bipartisan legislative activity that has produced at least six distinct bills since January 2026 targeting the sector’s intersection with insider information. The move reflects growing institutional discomfort with a market structure that, by design, prices political outcomes—and therefore creates direct financial incentives for those with privileged access to government decision-making to trade on it.
We suspect this latest proposal is less about prediction markets as a financial instrument and more about the accelerating realization that existing ethics frameworks, built around equities, not event contracts, are structurally inadequate for the current regulatory environment. The STOCK Act was not written with Kalshi in mind.
Public Integrity in Financial Prediction Markets Act: Provisions and Coverage
Representative Ritchie Torres (D-NY) introduced the Public Integrity in Financial Prediction Markets Act in January 2026, targeting federal elected officials, political appointees, executive branch staffers, and congressional staff.
The bill prohibits trading on outcomes tied to nonpublic information accessed through official duties—a narrower construction than blanket bans proposed elsewhere, but one that directly addresses the mechanism of potential abuse. Torres characterized the legislation as “not a ceiling, but a floor” for federal regulation of the sector.
Rep. Seth Moulton bans staff from using prediction markets like Kalshi, Polymarket https://t.co/HqtpZKkaFc
— CNBC (@CNBC) March 25, 2026
The bill sits alongside a crowded legislative field. Senators Jeff Merkley (D-OR) and Amy Klobuchar (D-MN) have proposed the End Prediction Market Corruption Act, which would prohibit the president, vice president, and members of Congress from trading on any prediction market platform outright. Senator Chris Murphy (D-CT) and Representative Greg Casar (D-TX) introduced the BETS OFF Act, Banning Event Trading on Sensitive Operations and Federal Functions, targeting contracts on terrorism, assassination, war, and government actions deemed controllable by insiders.
The bipartisan Event Contract Enforcement Act, sponsored by Representative Blake Moore (R-UT) and Representative Salud Carbajal (D-CA), directs the Commodity Futures Trading Commission (CFTC) to prohibit contracts tied to terrorism, sports, and illegal activities; Moore described it as ensuring markets “can continue to serve legitimate business interests while protecting Americans from risk.”
None of these bills is proximate to a floor vote, and the Trump administration’s posture toward prediction markets has been permissive rather than restrictive—a tension that complicates the legislative calculus considerably.
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Prediction Market and the Insider Information Problem
The regulatory backdrop for this legislative surge runs through the CFTC’s contested relationship with event 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 congressional control contracts produced a D.C. District Court ruling in September 2024 that election contracts did not constitute “gaming”—a decision that materially expanded the legal operating space for U.S.-facing prediction platforms and prompted the current legislative response.
Whether Congress can construct a workable insider trading framework for event contracts—instruments that are neither securities nor futures in the conventional sense—without first resolving the CFTC’s jurisdictional mandate over them remains the central unanswered question.
Prediction markets are one of the most exciting innovations in financial markets. Yet for too long, the @CFTC has failed to provide guidance for these markets being used by millions of Americans. This ends today.
Read what steps the agency is taking here⬇️…
— Mike Selig (@ChairmanSelig) March 12, 2026
The insider trading concern is not hypothetical. A $400,000 payout to a new Polymarket account, timed with the capture of former Venezuelan President Nicolás Maduro by U.S. forces, illustrated the exposure with uncomfortable precision. Platform-level responses have been partial: Kalshi has blocked politicians and athletes from betting on their own campaigns or events, while Polymarket has committed to curbing insider trading—measures Congress has publicly characterized as insufficient absent federal mandates.
The crypto infrastructure dimension compounds the compliance challenge. Polymarket settles contracts in USDC on Polygon, meaning any federal trading prohibition for covered officials would implicate on-chain activity that existing brokerage reporting frameworks cannot capture. A staff member holding a Polymarket position is not generating 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 aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with 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. A crypto native since 2017, Daniel leverages his background in on-chain analytics to author evidence-based reports and deep-dive guides. He holds certifications from The Blockchain Council, and is dedicated to providing “information gain” that cuts through market hype to find real-world blockchain utility.
