Sens. Jeff Merkley, D-Ore., and Amy Klobuchar, D-Minn., have introduced the End Prediction Market Corruption Act, a bill that would prohibit the president, vice president, and members of Congress from trading event contracts on prediction markets. The legislation would also ban senior executive branch officials from trading on these platforms if the event contract is related to issues they participate in “personally and substantially” as part of their official duties.
The proposal, announced March 5, is the latest federal push to address insider trading concerns after a series of suspiciously well-timed prediction market trades led to massive payouts for traders who placed those bets shortly before major global events, including the joint U.S.-Israeli military strike on Iran in February and the U.S. operation that captured Venezuelan President Nicolás Maduro in January.
In a press release, Merkley said, “When public officials use non-public information to win a bet, you have the perfect recipe to undermine the public’s belief that government officials are working for the public good, not for their own personal profits. Perfectly timed bets on prediction markets have the unmistakable stench of corruption.”
“This legislation strengthens the Commodity Futures Trading Commission’s ability to go after bad actors and provides rules of the road to prevent those with confidential government or policy information from exploiting their access for financial gain,” Klobuchar added.
In addition to restricting the participation of government officials on prediction markets, the bill’s text directs the CFTC to issue a rule restricting the misuse of material nonpublic information in event-contract trading and adds new financial-disclosure requirements for covered officials, their spouses, and dependent children.
Expanding Oversight & Enforcement
As written, the proposed bill would amend the Commodity Exchange Act to define and prohibit “event contract” trading by covered individuals. An event contract is defined as “an agreement, contract, transaction, or swap in an excluded commodity that is based on an occurrence, extent of an occurrence of, or contingency.”
Key parts of the legislation include:
- Wide-Ranging Restrictions: It bars the president, vice president, and members of Congress from purchasing or selling any event contract.
- Conflict of Interest Bans: Senior executive officials are prohibited from trading contracts related to matters they participate in “personally and substantially” through their official duties.
- Civil Penalties: The attorney general may seek civil penalties of up to $10,000 per violation, or the total amount of profit made from the illegal trade, whichever is greater.
- Transparency Requirements: The bill requires covered officials, as well as their spouses and dependent children, to disclose any event contract transactions in annual and periodic financial reports.
- Foreign Oversight: Foreign boards of trade must submit quarterly reports to the CFTC detailing any trades made in violation of these rules; failure to do so would result in the potential revocation of their registration.
Bill Part of Wider Push to Police Insider Trading
This new effort is the latest in a long list of legislative and regulatory measures aimed at addressing the ethics and oversight of prediction markets.
In January, Rep. Ritchie Torres, D-N.Y., introduced the Public Integrity in Financial Prediction Markets Act of 2026, which would bar federal officials, political appointees, executive branch employees, and congressional staff from trading certain government-related prediction contracts when they “possess material nonpublic information” or “may reasonably obtain such material nonpublic information in the course of performing official duties.”
At the state level, New York Assemblymember Phil Steck, a Democrat, introduced A9635, which would prohibit state agency employees, legislators, and legislative staff from using information obtained through official duties to trade on prediction markets or mobile sportsbooks.
The prediction markets industry is divided on how to handle insider trading. Kalshi CEO Tarek Mansour has come out aggressively backing bans on insider trading, arguing it “erodes trust” and that “liquidity dries up” when participants view the markets as being unfair.
On the other side of that argument is Polymarket CEO Shayne Coplan, who has made statements that traders with an edge could improve market accuracy, calling it a “good thing” and a “sort of inevitability.”
In a recent interview with CasinoBeats, former CFTC regulator Carl Kennedy explained that the CFTC already has the authority to pursue insider trading in these markets and that exchanges themselves act as “a cop on the beat” in policing misconduct.
As states and lawmakers continue to weigh in on the debate over prediction markets, this latest proposal adds to the argument that more clearly defined rules are needed to prevent insider trading by public officials.
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Sens. Jeff Merkley, D-Ore., and Amy Klobuchar, D-Minn., have introduced the End Prediction Market Corruption Act, a bill that would prohibit the president, vice president, and members of Congress from trading event contracts on prediction markets. The legislation would also ban senior executive branch officials from trading on these platforms if the event contract is
The post New Senate Bill Would Ban Federal Officials From Trading on Prediction Markets appeared first on CasinoBeats.