A bipartisan‑tinged group of House Democrats introduced legislation Friday that would stop federal officials from placing bets on prediction markets — a response to high‑profile wagers that critics say look a lot like insider trading.
Summary
- House members unveiled the Public Integrity in Financial Prediction Markets Act of 2026, aiming to bar federal officials and staff from participating in prediction markets.
- The bill targets officials who could act on material nonpublic information, prompted by high-profile bets on platforms like Polymarket that critics argue may exploit insider knowledge.
- Critics of the bill argue that prediction markets can efficiently surface information.
The newly unveiled Public Integrity in Financial Prediction Markets Act of 2026 would prohibit federal elected officials, political appointees, executive branch employees, and congressional staffers from buying, selling, or exchanging prediction market contracts on matters tied to government policy, government action, or political outcomes if they hold or could reasonably obtain material nonpublic information through their official roles.
Rep. Ritchie Torres (D‑N.Y.) and former House Speaker Nancy Pelosi spearheaded the effort.
“The most corrupt corner of Washington, D.C. may well be the intersection of prediction markets and the federal government—where insider trading and self-dealing are no longer imagined risks but demonstrated dangers,” Torres said. “We ignore this plain-sight corruption at our own peril. Imagine, for a moment, a member of the Trump Administration were to place a bet predicting an event like the removal of Nicolás Maduro.”
The move comes after scrutiny of a roughly $400,000 payout on a Polymarket wager tied to Venezuelan President Maduro’s removal — trades critics say may have benefited from privileged insight into U.S. operations.
Proponents, including U.S. Senator Chris Murphy, argue that Washington insiders should be blocked from participating when they sit atop information the public doesn’t have, a principle drawn from insider‑trading rules in securities law.
Here’s what Murphy wrote on X:
Kalshi CEO Tarek Mansour has even backed the bill, noting his platform already enforces insider‑trading prohibitions, while decentralized markets without strict rules have raised fairness concerns.
Opponents of restrictions say prediction markets can surface useful information, but lawmakers pitching the bill contend the risks of officials profiting from political or policy outcomes undermine public trust and call for clearer ethical boundaries.
This legislative effort reflects heightened scrutiny of how new financial technologies intersect with government power and the limits of existing regulation.
Source: https://crypto.news/pelosi-torres-government-off-prediction-markets/
