In response to a controversial wager on the capture of Venezuelan President Nicolás Maduro, US Representative Ritchie Torres (D-NY) is introducing legislation aimed at banning government officials from participating in politically related prediction markets. The bill, titled the "Public Integrity in Financial Prediction Markets Act of 2026," seeks to prevent insider trading and ensure public servants cannot exploit privileged information for personal financial gain.
The proposed law would apply to federal elected officials, political appointees, executive branch employees, and congressional staff. It would prohibit these individuals from trading contracts on prediction markets that are tied to government actions or political outcomes if they possess, or could reasonably obtain, material non-public information. This extends beyond those who currently have inside information to those who could gain it through their official duties, even if the data isn't available to the public. A spokesperson confirmed the bill aims to prevent the manipulation or misuse of privileged data for financial gain.
The catalyst for this legislative action was a $30,000 bet placed on Polymarket, a blockchain-based prediction market, anticipating Maduro's removal from office. The bet was placed just one day before Maduro was reportedly taken into custody, yielding a profit of over $400,000 for the bettor. This timing sparked concerns that the individual may have had prior knowledge of the event.
Torres stated that the goal is to establish clear boundaries, preventing public servants from profiting from information acquired through their official roles or from outcomes they might influence. He added that "prediction-market profiteering by government insiders must be prohibited," and that the bill is meant to stop the corruption of government by turning public service into a private enterprise.
The bill is co-sponsored by approximately 30 Democrats, including prominent figures such as Nancy Pelosi, Rashida Tlaib, and Eugene Vindman.
Prediction markets gained traction in 2024, particularly during the US presidential campaign, with platforms like Polymarket and Kalshi attracting users to wager on political outcomes. Polymarket, notably, has Donald Trump Jr. on its advisory board. While Kalshi enforces strict insider trading policies, Polymarket does not have a specific policy addressing it. The CEO of Polymarket has defended the platform's transparency by incentivizing information sharing.
Some state gaming regulators view prediction market platforms as illegal sports betting, while the companies contend they are regulated by the Commodity Futures Trading Commission (CFTC) and are more aligned with financial markets. In September, federal legislators expressed concerns to the CFTC regarding the platforms' sports contracts.
