Key Points
- Lawmakers propose banning congressional staff from trading on political prediction markets.
- Regulatory gaps and insider risks drive bipartisan scrutiny of event contracts.
A member of Congress has introduced legislation to bar congressional staff from trading on prediction market platforms.
The proposal reflects bipartisan concern that markets pricing political outcomes may enable trades based on nonpublic government information.
Public Integrity in Financial Prediction Markets Act
Representative Ritchie Torres introduced the Public Integrity in Financial Prediction Markets Act in January 2026.
The bill would prohibit federal elected officials, political appointees, executive branch employees, and congressional staff from trading on outcomes connected to nonpublic information obtained through their official duties.
The measure focuses on insider-based abuses rather than imposing a blanket ban on participation in prediction markets.
Other lawmakers have advanced broader restrictions.
Senators Jeff Merkley and Amy Klobuchar proposed legislation to block the president, vice president, and members of Congress from trading on any prediction market platform.
Senator Chris Murphy and Representative Greg Casar introduced the BETS OFF Act, targeting contracts linked to terrorism, assassination, war, and certain government actions.
The bipartisan Event Contract Enforcement Act, sponsored by Representatives Blake Moore and Salud Carbajal, would direct the Commodity Futures Trading Commission to prohibit contracts tied to terrorism, sports, and illegal activities.
None of the measures has advanced to a floor vote, and the current administration’s relatively permissive stance toward prediction markets adds complexity to the legislative path forward.
Regulatory Challenges and Insider Trading Risks
The legislative activity follows ongoing disputes between prediction platforms and the Commodity Futures Trading Commission (CFTC).
In 2022, the agency fined Polymarket and required it to block U.S. users, while a subsequent court ruling in 2024 allowed certain election-related contracts to proceed, expanding the operational space for U.S.-facing platforms.
Lawmakers argue that traditional ethics laws, including the STOCK Act, were designed for securities trading and do not clearly address event-based contracts.
Questions remain over how insider trading standards should apply to instruments that are neither conventional securities nor typical futures contracts.
Concerns have intensified following reports of large payouts connected to politically sensitive events, raising questions about access to privileged information.
Some platforms have adopted internal limits, such as restricting public officials from betting on their own races or events, but members of Congress have indicated that voluntary measures may not be sufficient.
Additional compliance challenges arise from crypto-based infrastructure.
Polymarket settles contracts in USDC on Polygon, meaning trades occur on-chain and may not generate traditional brokerage tax forms subject to standard regulatory review.
