Bipartisan Bill Aims to Prohibit Members of Congress from Trading on Prediction Markets

(AsiaGameHub) –   Washington’s legislative effort to restrict prediction markets shows no signs of slowing, as lawmakers continue their attempts to impose limits on these event contract platforms.

The latest example is a bipartisan bill co-sponsored by Reps. Adrian Smith (R-NE) and Nikki Budzinski (D-IL), which would bar members of Congress, senior federal officials, and other covered government personnel from trading on prediction markets tied to political events and government actions. 

Smith and Budzinski introduced the bill on March 25, adding another ethics-focused measure to the growing list of legislation targeting prediction markets. 

Named the Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act, or the PREDICT Act, the bill aims to prevent public officials from leveraging their access to sensitive information for personal gain. 

In the press release announcing the legislation, Smith stated: 

“Serving the American people is a privilege, not a means to profit. Our common-sense, bipartisan bill will assure Americans that their elected officials’ decisions are driven by merit, not personal gain. I am proud to collaborate with Representative Budzinski to ensure government officials do not profit from the sensitive information they are entrusted with.”

The bill follows a series of high-profile trades that anticipated major geopolitical events, including joint U.S.-Israeli strikes on Iran and the U.S. military’s capture of former Venezuelan President Nicolás Maduro, drawing scrutiny to insider trading on prediction markets such as Polymarket and Kalshi.

Budzinski emphasized these concerns in her statement about the proposed legislation:

“In recent months, we’ve witnessed cases where lesser-known traders made significant profits on events ranging from potential conflict with Iran to the duration of government shutdowns, raising valid questions about the use of inside information.” 

PREDICT Act Goes Beyond Members of Congress

As drafted, the PREDICT Act would not be limited to members of Congress; it would also apply to their spouses and dependent children, congressional staff, the president, the vice president, political appointees, certain senior executive branch officials, and members of the judiciary. 

The bill would prohibit these covered individuals from “enter[ing] into an agreement, contract, or transaction that provides for any purchase, sale, payment, or delivery dependent on the occurrence, nonoccurrence, or extent of occurrence of a specific political event.” 

While some congressional bills have not specified penalties for violating their provisions, this legislation includes enforceable measures. It states that violators would face a penalty equal to 10% of the value of the prohibited trade and must forfeit any profits, with the funds paid into the U.S. Treasury. The bill also requires ethics offices to publish fines and the reasons for them on a public website.

However, the effectiveness of these proposals as deterrents remains uncertain, given that similar legislation—such as the Stop Trading on Congressional Knowledge (STOCK) Act, passed over a decade ago—has not resulted in any insider trading prosecutions to date.

Congress Keeps Targeting Prediction Markets

The PREDICT Act is the latest addition to a rapidly expanding list of federal proposals aimed at regulating the event-contract industry. Here is an overview of other active measures:

• Public Integrity in Financial Prediction Markets Act: Introduced by Rep. Ritchie Torres (D-NY) in early January, this bill targets officials who trade on government-related contracts while in possession of “material nonpublic information.”

• End Prediction Market Corruption Act: Sens. Jeff Merkley (D-OR) and Amy Klobuchar (D-MN) proposed this bill on March 5 to entirely prohibit the president, vice president, and members of Congress from trading event contracts.

• DEATH BETS Act: Introduced by Sen. Adam Schiff (D-CA) on March 11, this legislation seeks to explicitly ban contracts related to war, assassinations, and individual deaths.

• Prediction Markets Security and Integrity Act: Sponsored by Sens. Richard Blumenthal (D-CT) and Andy Kim (D-NJ), this March 11 proposal focuses on consumer protections, age verification, and returning regulatory authority to individual states.

• Prediction Markets Are Gambling Act: Introduced on March 25 by Sens. John Curtis and Schiff, this bill aims to prohibit CFTC-regulated platforms from listing sports-related or casino-style event contracts.

Given the pace of legislative activity, there is no doubt that prediction markets are a focus of Congress. However, with so many bills now in motion, it remains unclear which, if any, will have a realistic path to becoming law.