A bipartisan coalition in the U.S. House of Representatives has introduced legislation designed to prohibit federal officials from participating in prediction markets. This initiative, led by Representative Ritchie Torres (D-N.Y.) and former House Speaker Nancy Pelosi, aims to address concerns regarding potential corruption at the intersection of prediction markets and government operations.
The proposed Public Integrity in Financial Prediction Markets Act of 2026 would make it illegal for federal elected officials, political appointees, executive branch employees, and congressional staffers to buy, sell, or exchange prediction market contracts related to government policies, actions, or political outcomes if they possess or could reasonably acquire material nonpublic information due to their official roles.
Torres emphasized the dangers of allowing insiders to profit from privileged information, stating, “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.” He cited a recent incident involving a $400,000 payout on a wager linked to the potential removal of Venezuelan President Nicolás Maduro, suggesting that such trades may have been influenced by inside knowledge of U.S. operations.
Supporters of the bill, including Senator Chris Murphy, argue that when officials have access to information not available to the public, their participation in prediction markets undermines trust in government. Murphy highlighted the need for ethical standards akin to those governing insider trading in securities markets.
Notably, Tarek Mansour, CEO of Kalshi, a regulated prediction market platform, has expressed his support for the legislation. He pointed out that his platform already enforces rules against insider trading, contrasting it with decentralized markets that often lack stringent regulations.
While some opponents of the bill contend that prediction markets can provide valuable insights into public sentiment and future events, proponents maintain that the risks of political figures profiting from their knowledge of government actions pose significant threats to public trust. This legislative effort reflects a broader scrutiny of how emerging financial technologies interact with governmental authority and the regulatory frameworks that govern them.
