Lawmakers are moving to clamp down on prediction markets following a string of high-profile insider trading cases that have exposed vulnerabilities in the largely unregulated betting platforms. The push comes as Congress grapples with how to police yet another financial technology that has outpaced regulatory frameworks.
The momentum intensified after a $30,000 wager on former Venezuelan President Nicolas Maduro's capture set off alarms in January. A U.S. soldier was later charged with using classified information to turn that bet into over $400,000 in illicit profits. Since then, reports have surfaced of political candidates, campaign staffers, and government officials with access to sensitive information placing bets on prediction markets tied directly to their work.
Rep. Ritchie Torres, a New York Democrat, introduced the latest proposal this month. His Campaign Funds Integrity Act of 2026 would criminalize the use of campaign money for prediction market bets, carrying penalties of up to five years in prison. The bill would task the Federal Election Commission with writing enforcement rules and referring violators to the Justice Department. While previous instances have involved lawmakers using campaign funds for traditional gambling, there is no indication that prediction market betting by lawmakers has actually occurred.
The legislative scramble reflects a broader pattern. More than a dozen bills targeting prediction market regulation landed in Congress this year alone, yet none have gained traction. Some proposals aim narrower targets, such as banning markets that wager on military conflicts or the deaths of named individuals. Others take expansive approaches, including a sweeping proposal from Rep. Jamie Raskin of Maryland and Sen. Jeff Merkley of Oregon to eliminate prediction markets tied to sports, politics, and military matters entirely.
A handful of platforms and government bodies have already moved on their own. Kalshi, a leading prediction market operator, and the U.S. Senate have both adopted restrictions on insider trading through their venues. These steps, however, have not forestalled the legislative push for formal guardrails.
The outlook for major legislation remains murky. The Trump administration has signaled resistance to strict regulatory guardrails, dimming prospects for any sweeping prediction market bill to reach the president's desk. That stance leaves Congress at another familiar impasse, seeking to regulate an emerging financial technology without the executive support needed to translate legislative ambition into law.
Author James Rodriguez: "Another day, another tech policy gap Congress can't seem to close before the next scandal hits."
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