30 Democratic Lawmakers Back Bill to Ban Insider Trading in Political Prediction Markets

Thirty Democratic lawmakers, including former House Speaker Nancy Pelosi, are backing a new bill that would prohibit elected officials from placing politically related bets on prediction markets. The legislation, titled the "Public Integrity in Financial Prediction Markets Act of 2026," was introduced by Rep. Ritchie Torres, D-N.Y. It comes in response to concerns over insider trading following a recent bet tied to the capture of former Venezuelan President Nicolás Maduro.

The bill aims to prevent federal elected officials, political appointees, and executive branch employees from making bets on prediction markets involving government policy or political outcomes when they have or could gain access to material information through their roles. According to analysis, the bill would expand the definition of insider trading to include federal employees and officials who engage in politically related prediction market contracts using nonpublic information. On Friday, the proposal was further expanded to include congressional staff, prohibiting them from participating in politically related prediction market contracts.

Rep. Torres stated that the bill is designed to prevent elected officials from profiting from their access to government information. "Imagine, for a moment, a member of the Trump Administration were to place a bet predicting an event like the removal of Nicolás Maduro," Torres said. As reported, "As both a government insider and a participant in the prediction markets, that individual would face a perverse incentive to personally push policies that line his pockets."

Why Did This Happen?

The legislation is a response to a recent incident in which a Polymarket account placed a $32,000 bet on the ousting of Maduro by the end of January 2026. Hours later, U.S. forces reportedly captured the former Venezuelan leader, causing the contract to settle and net the trader more than $400,000 in profit. The sudden and high-profit bet raised suspicions of insider knowledge being used in the prediction market.

The account in question had limited prior activity, with the Maduro trade accounting for the majority of its gains. This has led to speculation that the trader may have had access to political or military information, further intensifying calls for regulation.

What Are Analysts Watching Next?

The proposed bill seeks to mirror existing insider trading standards in traditional financial markets and apply them to the prediction market sector. It would expand the definition of insider trading to include federal employees and officials who engage in politically related prediction market contracts using nonpublic information. As noted by analysts, the Maduro bet has all the hallmarks of a trade based on inside information. Prediction market platforms like Polymarket and Kalshi have faced scrutiny over the lack of transparency and regulatory oversight.

Prediction markets have gained popularity over the past year, particularly during the 2024 election cycle. Platforms such as Polymarket and Kalshi have seen increased trading activity, with users often using cryptocurrency to place bets on political outcomes.

What Are the Next Steps for the Bill?

Rep. Torres and his team are encouraging all members of Congress to support the bill. Communications director Benny Stanislawski stated that it is possible for the bill to gain Republican support. The legislation has already attracted support from prominent Democrats like Reps. Sean Casten of Illinois, Brad Sherman of California, and Rashida Tlaib of Michigan.

The bill is still in its early stages and will need to undergo further legislative review. If passed, it would represent a significant step in regulating prediction markets and preventing potential insider trading by government officials. As analysis indicates, the legislation would expand the definition of insider trading to include federal employees and officials who engage in politically related prediction market contracts using nonpublic information.

The debate over prediction markets is part of a broader discussion about the role of financial innovation in politics and governance. As these markets continue to grow in popularity, the need for clear regulatory frameworks becomes increasingly evident. According to market observers, the proposed bill seeks to mirror existing insider trading standards in traditional financial markets and apply them to the prediction market sector.