Washington’s legislative push to clamp down on prediction markets doesn’t show any signs of slowing, as lawmakers continue with their attempts to place limits on these event contract exchanges.
The latest example is a bipartisan bill sponsored by Reps. Adrian Smith (R-NE) and Nikki Budzinski (D-IL), that would prohibit members of Congress, senior federal officials, and other covered government personnel from trading on prediction markets tied to political events and government action.
Smith and Budzinski introduced the bill on March 25, adding another ethics-focused measure to the long list of bills targeting prediction markets.
Named the Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act, or the PREDICT Act, the bill’s goal is to stop public officials from using their access to sensitive information for personal gain.
In the press release announcing the legislation, Smith said:
“Serving the American people is a privilege, not a pathway to profit. Our commonsense, bipartisan bill will give Americans confidence that the decisions of their elected officials are guided by merit, not personal profit. I am proud to partner with Representative Budzinski to ensure that government officials do not profit from the sensitive information entrusted to them.”
The bill follows a spate of high-profile trades that anticipated major geopolitical events, including the joint U.S.-Israeli strikes on Iran and the U.S.military’s capture of former Venezuelan President Nicolás Maduro, putting insider trading on prediction markets like Polymarket and Kalshi under the microscope.
Budzinski highlighted these concerns in her statement about the proposed legislation:
“In recent months, we’ve seen instances of little-known traders making massive profits on events ranging from war with Iran to how long a government shutdown will last, raising necessary questions about the use of inside information.”
PREDICT Act Goes Beyond Members of Congress
As written, the PREDICT Act wouldn’t stop at 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 ban these covered individuals from “enter[ing] into an agreement, contract, or transaction that provides for any purchase, sale, payment, or delivery that is dependent on the occurrence, nonoccurrence, or the extent of occurrence of a specific political event.”
While some bills introduced by members of Congress haven’t specified the consequences for violating the statutes, this one has teeth. It says that violators would face a penalty equal to 10% of the value of the prohibited trade and would have to disgorge any profits, with the money paid into the U.S. Treasury. The bill would also require ethics offices to publish fines and the reasons for them on a public website.
However, it’s unclear how effective a deterrent any of these proposals would be, given that similar legislation, such as the Stop Trading on Congressional Knowledge (STOCK) Act, hasn’t resulted in any insider trading prosecutions to date, and it was passed over a decade ago.
Congress Keeps Targeting Prediction Markets
The PREDICT Act is the latest addition to a quickly growing list of federal proposals to regulate the event-contract industry. Here is a look at 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 possessing “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 bar the president, vice president, and members of Congress from trading event contracts entirely.
- DEATH BETS Act: Introduced by Sen. Adam Schiff (D-CA) on March 11, this legislation specifically seeks to clarify a prohibition on 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 the return of regulatory authority to individual states.
- Prediction Markets Are Gambling Act: Introduced March 25 by Sens. John Curtis and Schiff, this bill aims to ban CFTC-regulated platforms from listing sports-related or casino-style event contracts.
Given the pace of the legislation, there’s no question that prediction markets are on Congress’s radar. However, with so many bills now in motion, it’s still far from clear which one, if any, has a realistic path forward.
The post Bipartisan Bill Seeks to Ban Members of Congress From Trading on Prediction Markets appeared first on CasinoBeats.
Washington’s legislative push to clamp down on prediction markets doesn’t show any signs of slowing, as lawmakers continue with their attempts to place limits on these event contract exchanges. The latest example is a bipartisan bill sponsored by Reps. Adrian Smith (R-NE) and Nikki Budzinski (D-IL), that would prohibit members of Congress, senior federal officials,
The post Bipartisan Bill Seeks to Ban Members of Congress From Trading on Prediction Markets appeared first on CasinoBeats.