SKN | U.S. Lawmakers Target Insider Trading in Prediction Markets With New Bill

Key Points

• New bipartisan bill targets insider trading in prediction markets.
• Government officials could face fines up to double their profits.
• Move follows rising concerns around platforms like Kalshi and Polymarket.

A group of U.S. lawmakers has introduced the Public Integrity in Financial Prediction Markets Act of 2026, aiming to curb insider trading by government officials participating in prediction markets.

The bipartisan effort, led by Todd Young, Elissa Slotkin, John Curtis and Adam Schiff, reflects growing concern that these platforms could be exploited using non-public government information.

What the Bill Proposes

The legislation would prohibit government officials from using insider knowledge to trade or bet on prediction market contracts.

It defines insider information as any non-public data that a reasonable investor would consider important when making decisions on such contracts.

If passed, the rules would apply broadly across government, including the president, vice president, members of Congress and employees of federal agencies.

Strict Reporting and Penalties

The bill introduces clear reporting requirements. Officials would need to disclose trades exceeding $250 within 30 days, including detailed transaction data such as timing, pricing and profits.

Violations would carry significant penalties, with fines set at the greater of $500 or double the profits gained, adding real enforcement power to the proposal.

Rising Scrutiny of Prediction Markets

The push comes as prediction markets gain popularity and increasingly intersect with real-world political and economic events.

Lawmakers are concerned that these platforms blur the line between financial trading and betting, creating new opportunities for insider advantage.

A separate proposal introduced earlier in the week—the PREDICT Act—also seeks to limit insider trading, particularly in markets tied to political outcomes and policy decisions.

Industry and Regulatory Momentum

At the same time, platforms themselves are tightening controls. Both Kalshi and Polymarket have recently implemented restrictions to prevent insider participation and improve compliance.

The growing legislative and industry response signals that prediction markets are entering a new phase of regulation, as policymakers attempt to ensure transparency and fairness in this emerging sector.

A New Frontier for Financial Ethics

As prediction markets expand, regulators are racing to define clear rules around their use—especially when it comes to public officials.

The outcome of these legislative efforts could shape how these platforms evolve, determining whether they remain niche tools or become mainstream financial instruments.