A group of Democratic lawmakers has introduced new legislation aimed at preventing elected officials and government insiders from participating in political prediction markets, citing concerns over conflicts of interest and misuse of nonpublic information. The proposal follows heightened scrutiny of crypto-powered betting platforms that allow users to wager on political outcomes, policy decisions, and geopolitical events. Supporters of the bill argue that such markets create incentives for officials to act in ways that could personally benefit their trading positions. The issue gained urgency after reports that a prediction market wager tied to the removal of a foreign political leader generated significant profits, raising questions about whether traders with access to sensitive information could influence or anticipate government actions. As prediction markets grow in scale and visibility, lawmakers are increasingly focused on drawing clear ethical boundaries around participation.
The legislation, formally titled the Public Integrity in Financial Prediction Markets Act of 2026, was introduced by Ritchie Torres and has garnered support from more than thirty Democratic lawmakers, including former House Speaker Nancy Pelosi. The bill would prohibit federal elected officials, political appointees, executive branch employees, and congressional staff from placing bets on prediction markets involving government policy, political outcomes, or official actions when they possess or could access material nonpublic information through their roles. Backers of the bill argue that allowing such activity undermines public trust and creates perverse incentives, particularly when prediction markets are increasingly intertwined with cryptocurrency infrastructure and global liquidity. The proposal also reflects broader concern about the speed at which digital markets can react to political developments, often ahead of public disclosures.
Prediction platforms such as Polymarket and Kalshi have seen rapid growth over the past year, especially during major election cycles, offering markets on everything from election results to regulatory decisions. While advocates argue these markets improve price discovery and reflect collective expectations, critics warn that participation by government insiders risks blurring the line between forecasting and exploitation. The bill’s sponsors have signaled openness to bipartisan support, framing the issue as one of ethics rather than ideology. If passed, the measure would mark one of the first direct federal efforts to regulate who can participate in crypto-enabled prediction markets, reinforcing a trend toward tighter oversight of digital financial products that intersect with public policy and governance.
