Pelosi and 30 Other Democrats Push Bill to Ban Insider Trading on Prediction Markets

Rep. Ritchie Torres has introduced the Public Integrity in Financial Prediction Markets Act of 2026. The bill would prohibit federal officials from betting on prediction markets related to political outcomes when they have nonpublic information according to the bill's provisions. This follows concerns over a bet on the capture of Venezuelan President Nicolás Maduro that yielded a $400,000 profit as reported.

The legislation has been endorsed by 30 House Democrats, including former Speaker Nancy Pelosi. It aims to prevent conflicts of interest by banning officials from trading on outcomes they might influence according to analysis. The bill has expanded to include congressional staff in its restrictions as detailed.

A newly created Polymarket account placed a $32,000 bet on Maduro's removal from power just before his capture by U.S. forces. The bet paid out $400,000, sparking allegations of insider trading according to reports.

Why Did This Happen?

The bill was prompted by the timing and scale of the Polymarket trade on Maduro's removal. The account had no prior activity, raising questions about whether the trade used nonpublic information according to investigation. Rep. Torres called the incident a "demonstrated danger" at the intersection of prediction markets and government as stated.

Similar concerns have been raised about prediction markets used for betting on events like press conference durations and other political outcomes according to analysis. These markets are regulated by the Commodity Futures Trading Commission, but insider trading laws are not clearly applied to them as noted.

How Did Markets React?

Kalshi has already implemented rules against insider trading, stating that government officials would have been barred from making the Maduro trade according to their policy. Polymarket has faced scrutiny but does not currently have restrictions on insider trading.

The bill has drawn attention from prediction market operators, with Kalshi CEO Tarek Mansour supporting it. Polymarket has not responded to requests for comment. The bill could influence how platforms monitor and enforce trading rules.

What Are Analysts Watching Next?

The bill introduces criminal penalties for officials found to have traded on nonpublic information. It draws from the STOCK Act but adapts it to prediction markets. Analysts are watching how the bill will affect market participation and enforcement.

Torres has called for bipartisan support, and the bill's success will depend on whether Republicans join the effort. The legislation could serve as a foundation for broader regulatory efforts in the sector.

The bill's implementation also raises technical and enforcement challenges, especially in blockchain-based markets. Detecting insider trading may require advanced analytics and regulatory cooperation.

The bill highlights a growing trend of scrutiny over prediction markets. As platforms like Kalshi and Polymarket gain popularity, lawmakers are increasingly concerned about the ethical implications of government officials participating in these markets.

The bill does not cover the broader regulation of prediction markets but aims to address immediate concerns about insider trading. It is one of several measures being considered as prediction markets evolve.