Legislators Present New Legislation Aiming at Insider Trading in Prediction Markets

A bipartisan coalition of senators presented the Public Integrity in Financial Prediction Markets Act of 2026 on Thursday, which forbids government officials from utilizing nonpublic information to engage in prediction-market contracts and enforces penalties amounting to twice the profits gained. This marks the second prediction market legislation introduced within the week. Such frequency is intentional, serving as a coordinated legislative message.

The legislation encompasses the president, vice president, members of Congress, political appointees, and staff of executive and independent regulatory bodies. Any contract wager exceeding $250 is required to be reported to a supervising ethics office within 30 days, with disclosure obligations that include price, position, platform name, and profit or loss.

Congress is establishing boundaries around prediction markets as a potential avenue for insider trading. The introduction of two bills in five days indicates that this is no longer a marginal issue.

• Legislative Scope: The Public Integrity in Financial Prediction Markets Act includes the president, vice president, all members of Congress, political appointees, and federal agency personnel — mandating the reporting of any contract wager surpassing $250 within 30 days.
• Penalty Structure: Offenses incur fines up to double the profits earned, directly addressing financial incentives rather than imposing standard regulatory penalties.
• Market Implication: Platforms such as Kalshi and Polymarket — which revised trading regulations on March 23, 2026, to prohibit the use of confidential information — may now encounter potential CFTC scrutiny and obligatory compliance audits if either bill progresses to markup.

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The Bill: What the Public Integrity Act Actually Prohibits

Senators Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff introduced the bill during the second session of the 119th Congress. The legislation characterizes insider information as any data a “reasonable investor would consider significant” in making a prediction market decision that is not publicly accessible — a definition intentionally broad enough to encompass policy insights, regulatory choices, and governmental actions prior to their announcement.

The reporting framework mandates officials to reveal the number of contracts acquired, the price and timestamp of each transaction, the contract name, the position taken, the trading platform utilized, and any profit or loss. This level of detail aligns with securities disclosure requirements, rather than casual wagering oversight.

Senator Slotkin articulated the bill’s intent clearly: “No one should be profiting off the information and knowledge gained as a public servant, period.” She emphasized that the bill “has real teeth to ensure those who break these rules face real consequences.” The double-profit penalty structure aims to remove any financial rationale behind the violation.

This legislation follows the PREDICT Act, introduced on March 25, 2026, by Reps. Nikki Budzinski (D-IL) and Adrian Smith (R-NE), which imposes civil penalties of 10% of the transaction value plus full disgorgement of profits to the U.S. Treasury. The PREDICT Act broadens trading prohibitions to include spouses, dependent children, and Executive Schedule positions — extending the personal scope beyond that of the Senate bill. Collectively, they encompass nearly every category of federal official and their immediate families.

Rep. Adrian Smith summarized the bipartisan rationale: “Our commonsense, bipartisan bill will give Americans confidence that the decisions of their elected officials are guided by merit, not personal profit.” Both bills specifically target platforms, including Kalshi and Polymarket, which have emerged as the leading U.S.-accessible prediction market venues.

The Curtis-Schiff Senate initiative, introduced earlier this week, also presented a companion measure aimed at sports betting contracts on prediction platforms, representing a third legislative angle alongside the insider trading focus. This broader approach suggests that Congressional intent reaches beyond political event markets into the entire prediction market sector.

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