SKN | Rep. Torres Moves to Curb Insider Trading on Prediction Markets After Polymarket Maduro Bet

Key Points

1. Rep. Ritchie Torres plans to introduce legislation banning insider trading on political prediction markets.

2. The move follows a Polymarket wager that reportedly turned $32,000 into over $400,000 after Maduro’s capture.

3. The bill would extend traditional insider trading rules to prediction markets tied to government and political outcomes.

US Representative Ritchie Torres is preparing legislation that would sharply restrict insider trading on political prediction markets, following controversy surrounding a highly profitable wager tied to the reported capture of Venezuelan President Nicolás Maduro.

The proposed bill, expected to be introduced in early 2026, comes after a single trader reportedly turned a relatively small stake into a six-figure payout on Polymarket, raising questions about whether nonpublic government information may have been used to gain an unfair advantage.

A Legislative Response to a Market Shock

According to Punchbowl News founder Jake Sherman, Torres plans to introduce the Public Integrity in Financial Prediction Markets Act of 2026. The legislation would prohibit federal elected officials, political appointees, and executive branch employees from buying, selling, or exchanging prediction market contracts tied to government policy, political outcomes, or state actions when they possess material nonpublic information obtained through their official roles.

The framework closely mirrors insider trading restrictions that already govern equities and derivatives markets, but would explicitly extend those standards to the rapidly growing prediction market sector. In effect, the bill aims to ensure that prediction markets do not become a venue where privileged access to classified or sensitive information translates into personal financial gain.

The Maduro Bet That Sparked Scrutiny

The legislative push follows a controversial trade placed on Polymarket earlier this month. A newly created account reportedly wagered about $32,000 on a contract predicting Maduro’s removal from power by Jan. 31, 2026. Within hours of reports that US forces had captured the Venezuelan leader, the contract settled, netting the trader more than $400,000.

The timing and scale of the profit immediately drew attention. The account had minimal prior activity, and the Maduro wager accounted for the overwhelming majority of its gains. While no evidence has emerged linking the trade to a government insider, the episode intensified concerns that prediction markets could be vulnerable to abuse by individuals with access to political or military intelligence.

Prediction Markets at a Regulatory Crossroads

Prediction markets have grown rapidly over the past two years, attracting traders interested in hedging political risk or speculating on elections, geopolitical events, and policy decisions. Platforms like Polymarket and Kalshi argue that these markets improve price discovery and public forecasting accuracy. Critics counter that without clear guardrails, they risk becoming shadow venues for insider trading.

In response to the controversy, Kalshi said its rules already prohibit insiders or decision-makers from trading on material nonpublic information. However, enforcement largely depends on internal monitoring rather than explicit statutory bans, a gap Torres’ proposal seeks to close.

Broader Implications for Crypto and Political Finance

Torres’ move signals growing congressional interest in treating prediction markets more like traditional financial venues, particularly as they intersect with crypto infrastructure and global geopolitics. If passed, the bill could reshape participation rules, limiting who can trade politically sensitive contracts and increasing compliance costs for platforms operating in interstate commerce.

The episode also underscores a broader tension: as markets increasingly price real-world political outcomes in real time, regulators face pressure to balance transparency, innovation, and public trust. Whether the legislation gains bipartisan support remains to be seen, but the message is clear. Washington is no longer viewing prediction markets as a niche experiment, but as financial instruments with real integrity risks.