Rep. Torres to Target Insider Trading on Prediction Markets After Maduro Bet

US Representative Ritchie Torres is introducing legislation to criminalize insider trading on prediction markets, following a controversial high-profit wager linked to the sudden capture of Venezuelan President Nicolás Maduro.

The proposed Public Integrity in Financial Prediction Markets Act of 2026 would bar federal officials from trading on contracts tied to political outcomes or government policy when they possess nonpublic information according to the bill's provisions. The bill extends existing insider trading standards to the prediction market sector, a move aimed at ensuring market fairness and transparency.

The initiative comes after a Polymarket user made a $32,000 bet on Maduro's removal from power, which turned into a $436,759 profit within 24 hours after U.S. forces captured the president. The trader used a newly created account, raising suspicions of potential insider knowledge.

Why Did This Happen?

The bill was triggered by concerns over potential abuse of prediction markets for insider trading as reported by analysts. Similar to traditional stock markets, prediction platforms now face scrutiny over their role in enabling trades based on nonpublic information. The sudden capture of Maduro and the resulting market reaction highlighted vulnerabilities in the system.

The bet on Maduro's political future was made just one day before U.S. forces took action, and the contract settled at nearly full value. This raised questions about whether the trader had access to information not available to the general public. The transaction became a focal point for critics of unregulated prediction markets.

How Did Platforms React?

Polymarket, the platform where the high-profit trade occurred, has no formal restrictions against insider trading. CEO Shayne Coplan has even argued that such trades can serve a public good by incentivizing information sharing according to company statements. However, Kalshi, another major prediction market platform, already prohibits insider trading for officials and decision-makers.

Kalshi's press relations account stated that the platform's rules explicitly bar trading on material nonpublic information as confirmed by their policy. This contrast between platforms underscores the need for a unified regulatory approach, which Torres' bill seeks to establish.

What Are Analysts Watching Next?

The proposed legislation would apply to any prediction market platform conducting interstate commerce, aiming to prevent abuses by government officials. Analysts are watching how the bill will be received in Congress and whether it will face pushback from prediction market advocates.

The bill is modeled after the STOCK Act, which bars insider trading by government officials in traditional financial markets as noted by industry observers. If passed, it could significantly reshape how prediction markets operate, particularly for federal officials and political appointees who may now face legal restrictions on trading.

The broader implications of the bill could extend to market confidence. Prediction markets rely on accurate pricing signals to reflect public sentiment and expected outcomes. If insiders are allowed to manipulate these signals, the integrity of the market could be compromised.

The bill also follows reports of unauthorized account access on Polymarket, where users experienced suspicious login attempts and drained balances as reported by security analysts. While the company attributed the issue to a third-party vulnerability, the incident has added to growing concerns about security and market integrity in the space.

Investors and market participants will be watching how prediction market platforms adapt to the new regulatory environment, including whether they implement stricter controls for government officials and insider transactions.

With the Public Integrity in Financial Prediction Markets Act of 2026 expected to be introduced this week, the debate over insider trading in the prediction market space is likely to intensify in the coming months.