Two House lawmakers from opposite parties are pushing new legislation they say would stop federal officials from cashing in on inside knowledge through prediction markets.
Rep. Adrian Smith, a Republican from Nebraska, and Rep. Nikki Budzinski, a Democrat from Illinois, introduced the Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act, known as the PREDICT Act, on March 25. Their proposal responds to the rapid rise of online platforms that let users wager on the outcomes of elections, policy decisions, and global events.
Proposal would bar Congress, White House officials from event-based trading
If passed, the bill would bar members of Congress, their spouses, and dependent children from trading on prediction markets tied to political or government actions. The same restrictions would extend to the president, vice president, and senior political appointees across the executive branch.
Anyone who breaks the proposed rules would face a civil fine equal to 10% of the value of the banned trade. They would also be required to surrender any profits from those transactions, with the money going to the U.S. Treasury.
PREDICT Act aims to close perceived ethics loophole
Backers of the legislation argue that prediction markets have grown quickly and now present a new avenue for potential insider trading that existing ethics laws may not fully cover.
“Serving the American people is a privilege, not a pathway to profit. Our commonsense, bipartisan bill will give Americans confidence that the decisions of their elected officials are guided by merit, not personal profit. I am proud to partner with Representative Budzinski to ensure that government officials do not profit from the sensitive information entrusted to them,” Smith said in a statement when announcing the legislation.
Sponsors point to high-profile trades tied to wars and shutdowns
Budzinski said recent high-profile bets tied to global conflicts and domestic political standoffs show how lucrative these markets can be for those with the right information.
“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. 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,”
She added that the legislation is intended to “close that loophole and ensure that those with access to sensitive information cannot profit from it.”
Senate and House efforts signal widening federal scrutiny
The House effort comes as lawmakers in the Senate have been examining similar concerns. Separate bipartisan proposals have sought to restrict or ban certain types of event-based and sports-related prediction markets, with supporters arguing they blur the line between financial products and unregulated gambling. Those measures reflect a growing unease in Washington over how quickly these platforms are expanding and how they are overseen.
Federal court ruling in Nevada highlights legal uncertainty
Legal battles have also intensified. In Nevada, a federal court recently blocked the prediction market platform Kalshi from offering certain event contracts in the state, siding with regulators who argued the products resembled sports betting.
The decision just showcases the unsettled regulatory landscape facing the industry and why some lawmakers say clearer federal rules are needed.
Measure heads to committee amid broader ethics push
For now, the PREDICT Act has been referred for consideration in the House, where it will face committee review before any potential floor vote.
Its introduction adds to a broader bipartisan push to tighten ethics rules and close perceived gaps that allow public officials to profit from their positions.
