U.S. Representative Bryan Steil, chair of the House subcommittee on digital assets, has introduced legislation aimed at preventing members of Congress—and certain family members—from profitin
U.S. Representative Bryan Steil, chair of the House subcommittee on digital assets, has introduced legislation aimed at preventing members of Congress—and certain family members—from profiting through prediction markets tied to public-policy decisions and “political outcomes.” The proposal, described in a Thursday notice from Steil’s office, would create a narrowly tailored restriction focused on event contracts that reference government action rather than all forms of political or market participation.
The bill reflects ongoing legislative efforts to address concerns that prediction markets could be used to translate privileged information into financial gain. It also adds a new compliance layer for platforms operating in the United States, particularly those marketing policy-relevant event contracts to U.S. users and institutions.
According to Steil’s announcement, the Stop Lawmakers from Predicting Act is designed to prevent public officials from “wagering on public policy issues and political outcomes.” The bill’s stated focus is not on whether lawmakers may use prediction markets as participants broadly, but on whether they may place event-contract bets that map directly onto governmental policies, specific actions by the government, and political developments.
The proposal specifically contemplates restrictions for “members of Congress, their spouses, and dependent children.” It would prohibit those individuals from using prediction market platforms—such as Kalshi and Polymarket—for contracts that are aligned with government policy or political results.
Steil’s office outlined a penalty framework for violations. Under the bill, prohibited participants would be subject to either a $2,000 fee or a penalty equal to 10% of the value of the affected bets, depending on the application of the statute. If Congress passes the act and the president signs it, the proposal would reportedly take effect 180 days after enactment.
In practice, the bill would require prediction market operators to consider how to identify and restrict access by covered persons. Unlike broad trading prohibitions that target entire classes of market activity, this proposal aims at a defined subset: contracts tied to government actions and policy outcomes.
For compliance teams, that distinction matters. Platforms would need to define contract categories with sufficient specificity to determine which events are “policy-aligned” or concern “political outcomes,” and then implement controls that can flag when a covered person attempts to place a wager. The requirement also creates a compliance question for affiliates, payment processors, and customer due diligence processes: who must be screened, what documentation is necessary, and how sanctions and penalties would be monitored.
For institutional observers, the bill also functions as a legislative attempt to address reputational and governance concerns around the fairness of markets whose payoffs depend on political events. Even when a prediction market is structurally legal, policymakers and regulators frequently assess the risk of insider access, information asymmetry, and conflicts of interest—issues that are closely connected to broader AML/KYC and ethics compliance frameworks.
Steil’s draft does not specifically establish a blanket prohibition on U.S. lawmakers using prediction market platforms, and it likewise does not broadly outlaw wagers on sporting events. Instead, it targets contracts tied to government policies, government actions, and political outcomes—categories that would likely require platform-specific classification and careful legal interpretation.
The proposed restriction is also notable for who is not included. The legislation does not explicitly bar White House officials, including the president and vice president. Coverage of the issue has also pointed to the involvement of Donald Trump Jr., who has been described as a strategic adviser to Kalshi, and to Polymarket, which has been referenced as having a sponsorship connection to a White House event.
Cointelegraph reported that Steil’s office was contacted for comment but did not receive an immediate response. That incomplete public record underscores an unresolved compliance gap: while Congress-focused restrictions could be implemented relatively directly, questions about broader conflicts of interest and political influence may persist if other officials remain outside the bill’s defined scope.
Steil’s proposal arrives during an active federal regulatory dispute over prediction markets. Under the Trump administration, the Commodity Futures Trading Commission (CFTC) and its chair, Michael Selig, have argued that the agency has “exclusive jurisdiction” over regulation and enforcement for prediction market activity.
Cointelegraph has previously reported that the CFTC filed multiple lawsuits against state-level authorities that sought to restrict or ban prediction market platforms. The CFTC’s argument rests on the view that certain event contracts can be regulated as “swaps” under the Commodity Exchange Act—rather than ordinary bets—placing them within federal oversight.
Some legal experts have suggested that the ongoing jurisdiction battle could escalate further, potentially reaching the U.S. Supreme Court. If courts determine that the CFTC’s characterization is controlling, it could reshape the compliance landscape for platforms by centralizing federal enforcement rather than leaving states to impose varying restrictions.
That jurisdictional context is important to the new bill because it highlights a split between two overlapping regulatory aims: (1) enforcing insider-conflict and ethics concerns through legislation aimed at specific public officials, and (2) establishing which regulator has authority over the underlying trading instrument and platform activity. A bill that restricts participation by covered individuals does not automatically resolve instrument classification disputes; similarly, federal jurisdiction rulings do not determine how conflict-of-interest rules apply to lawmakers.
As enforcement frameworks develop, prediction market operators may face multi-layer compliance expectations: platform-level controls for participant eligibility and event-type categorization, alongside ongoing monitoring for activities that regulators might characterize as covered derivatives under federal law.
While the Stop Lawmakers from Predicting Act targets a specific conflict-of-interest risk tied to policy and political event contracts, its prospects depend on congressional action and how it is operationalized by exchanges and market operators. The parallel CFTC jurisdiction litigation will likely remain a key driver of regulatory certainty, and the legal outcome may influence how quickly platforms can standardize compliance across states and federal enforcement positions.
This article was originally published as Republican Bill Targets Insider Trading in Prediction Markets on Crypto Breaking News – your trusted source for crypto news, Bitcoin news, and blockchain updates.
