A new bipartisan bill in Congress could stop the President, lawmakers, and their families from cashing in on prediction markets. The PREDICT Act, introduced this week, takes aim at insider betting tied to political events and military operations, arriving at a time when suspiciously timed trades on platforms like Polymarket have already drawn national outrage.
Here is what you need to know about the bill, who it targets, and why it matters now more than ever.
What Is the PREDICT Act and Who Introduced It?
Congressman Adrian Smith (R-NE) and Congresswoman Nikki Budzinski (D-IL) introduced the Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act (PREDICT Act), a bipartisan effort to prohibit senior government officials from participating in insider prediction market trading.1
The bill is built around a simple idea. The measure focuses on who can trade rather than on the broader legality of prediction markets themselves, keeping the emphasis on political ethics, conflicts of interest, and the use of sensitive government information.2
Smith framed the purpose in blunt terms. “Serving the American people is a privilege, not a pathway to profit,” he said, adding that their “commonsense, bipartisan bill will give Americans confidence that the decisions of their elected officials are guided by merit, not personal profit.”1
The bill’s sponsors have portrayed the measure as a direct response to recent accusations of questionable, calculated wagers on geopolitical and policy outcomes.3
bipartisan PREDICT Act banning federal officials prediction market insider trading
Who Would Be Banned from Prediction Market Trading?
The PREDICT Act casts a wide net. Members of Congress, their spouses and dependents, the President, Vice President, political appointees, senior executive branch employees above the GS-15 level, military officers at the O-7 and above level, and judicial officials all fall under its restrictions.4
The bill also covers family members, closing a potential loophole where officials could use relatives to place trades on their behalf.
The bill covers both regulated platforms like Kalshi and crypto-native websites like Polymarket that run on public blockchains.3 Lawmakers drafted the language to distinguish prediction markets as a separate product class rather than treating them like standard futures contracts or conventional securities.3
Here is a quick breakdown of who the PREDICT Act would restrict:
| Covered Individuals | What Is Banned |
|---|---|
| President and Vice President | Bets on political events, policy outcomes, government actions |
| Members of Congress | Same as above |
| Senior executive branch officials | Same as above |
| Political appointees | Same as above |
| Military officers (O-7 and above) | Same as above |
| Spouses and dependent children of all above | Same as above |
What Are the Penalties for Breaking the Law?
The punishment structure is designed to hit where it hurts.
Violations would trigger a civil penalty equal to 10% of the value of the prohibited transaction, along with full disgorgement of any profits earned, to be paid into the U.S. Treasury.5
There is another important detail many have missed. Officials cannot use office allowances, campaign contributions, or government salaries to cover those penalties.4 That means violators would have to pay fines and forfeit profits entirely out of pocket.
This is not just a slap on the wrist. It is a financial deterrent aimed at making insider bets too costly to risk.
The penalty structure shows that the sponsors want the bill to carry real deterrent force. The PREDICT Act is not written as a symbolic reprimand, but as a financial disincentive aimed at making prohibited trades costly.5
Why This Bill Matters Right Now
The timing of the PREDICT Act is no accident.
A trader made nearly $1 million since 2024 from dozens of well-timed Polymarket bets that correctly predicted US and Israeli military actions against Iran. The bettor won a staggering 93% of their five-figure wagers about Iran, even though the events they predicted were unannounced military operations.6
In the hours before the February 28, 2026 U.S.-Israeli strike on Iran, six newly created Polymarket wallets collectively earned approximately $1.2 million.7 All six profiles were created in February, according to Polymarket data.8
Budzinski pointed directly at these cases. “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,”1 she said.
Some Democrats also pointed out that the president’s son, Donald Trump Jr., joined Polymarket’s advisory board last year and his conservative venture capital fund invested an undisclosed amount in the company.9 Trump Jr. also serves as an adviser to Kalshi. A spokesperson for Trump Jr. told CNN he does not trade on prediction markets and only advises Kalshi and Polymarket about marketing strategies.9
The Iran trades sparked broader outrage: lawmakers expressed alarm about a lack of regulation, traders vented about unclear market rules, government watchdogs worried about possible corruption, and academics wondered aloud about the morality of wagering money on people’s lives.9
A Wave of New Bills Targeting Prediction Markets
The PREDICT Act does not stand alone. Congress is mounting a multi-front push against the prediction market industry:
- BETS OFF Act: This bill would prohibit platforms like Polymarket and Kalshi from allowing bets on government actions, terrorism, war, assassination, and events where an individual knows or controls the outcome.10
- Prediction Markets Are Gambling Act: Senators Adam Schiff and John Curtis introduced this bill, which would prohibit CFTC-regulated entities from offering sports-related prediction market contracts.2
- DEATH BETS Act: Schiff and Representative Mike Levin introduced this measure to prohibit event contracts tied to war, assassination, and terrorism.4
- STOP Corrupt Bets Act: Senator Jeff Merkley introduced this bill on Thursday, while Representative Jamie Raskin is introducing the House version. It would ban event contracts on elections, sports, government actions, and military moves.11
Meanwhile, on March 16, 2026, the CFTC published an Advanced Notice of Proposed Rulemaking seeking comment regarding event contract derivatives traded on prediction markets.12 Comments must be in writing and received by April 30, 2026.13
Prediction market platforms are not sitting idle either. Polymarket updated its rules to prohibit trading on stolen confidential information or by someone who could influence an outcome. Kalshi said it was launching new technological guardrails that preemptively block politicians, athletes, and other relevant people from trading in certain markets.10
But critics argue self-regulation is not enough. “I think the concern is, if these market platforms don’t implement their own regimes, then someone’s going to do that for them,” legal expert Piepgrass told CBS News.14
The PREDICT Act is more than just another bill. It is a signal that Washington is done looking the other way while insiders potentially profit from wars, shutdowns, and policy moves. Whether this bill passes or not, the debate around prediction markets has reached a turning point. The question is no longer whether regulation is coming, but how far it will go. If this story matters to you, drop your thoughts in the comments below.
