Reps. Adrian Smith (R-NE) and Nikki Budzinski (D-IL) unveiled bipartisan legislation Wednesday aiming to ban members of Congress from prediction market trading on political events, policy decisions, and other government action.
The Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act applies to all members of Congress, their spouses, and dependent children. It also includes the president, the vice president, and all political appointees.
“The American people are tired of politicians using their influence for personal gain, and the rise of prediction markets has made those concerns even more relevant,” Budzinski said in a press release. “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.”
The bill establishes consequences for lawmakers found to be in violation of the new ban. That includes a fine equal to 10% of the value of the transaction and the full confiscation of any profits. The penalties would be paid into the U.S Treasury. Lawmakers would be prohibited from using campaign contributions or congressional funds to pay the penalties.
The bill comes as banning insider stock trading remains at a standstill, despite multiple bipartisan pushes. The last legislation on this issue to be signed into law was over a decade ago, in 2012.
Prediction markets have become increasingly popular, as many people have made large sums of money from world events, especially since President Donald Trump took office again.
This week, Polymarket released new “market integrity rules” focused on preventing individuals from profiting from stolen confidential information, illegal tips, or outcomes they have influence over. Kalshi, similarly, has added “new guardrails” to prevent sports participants and political candidates from trading on their own respective leagues and campaigns.
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The ban on lawmakers using the prediction market is only one of several bills introduced on the topic in recent weeks.
Sens. John Curtis (R-UT) and Adam Schiff (D-CA) introduced a bill on Monday that would ban prediction markets from offering wagers on sports. The bill was introduced on the heels of MLB naming Polymarket as its prediction market partner.