Pelosi and 30 Democrats Aim to Prohibit Prediction Markets After $400K Maduro Wager Raises Concerns

More than 30 Democrats in the U.S. House of Representatives, including former Speaker Nancy Pelosi, are backing new legislation aimed at limiting interactions between government officials and prediction markets.

The motivation behind these new restrictions stems from a contentious Polymarket wager, which began as a $32,000 bet but escalated to over $400,000 just prior to the unexpected arrest of Venezuelan President Nicolás Maduro.

The bill introduced by New York Representative Ritchie Torres is called the Public Integrity in Financial Prediction Markets Act of 2026.

Thrilled to present the Public Integrity in Financial Prediction Markets Act today with the backing of over 30 colleagues.
The blurred distinction between predicting and profiting not only corrupts markets; it undermines the government itself.https://t.co/uayPKdHxQn

— Rep. Ritchie Torres (@RepRitchie) January 9, 2026

Torres noted that the legislation emerged due to a new Polymarket account that made a significant wager on Maduro’s removal by the end of January 2026, despite market odds indicating that such an outcome was highly improbable.

A few hours later, U.S. officials announced the arrest of Maduro and his wife, Cilia Flores, in a nighttime operation coordinated by the Trump administration.

$BTC remains strong above $90K despite tensions between the U.S. and Venezuela, with on-chain data indicating stable holder behavior and market calm #Bitcoin #Venezuelahttps://t.co/pV1VWDArfm

— Cryptonews.com (@cryptonews) January 5, 2026

The contract quickly paid out at the maximum limit, yielding returns exceeding 1,200%. Consequently, lawmakers and market analysts expressed concerns that the transaction may have been based on material nonpublic information.

Torres argued that this incident highlighted a gap in federal legislation when prediction markets become widespread and influential, particularly regarding significant political or military decisions.

@RitchieTorres seeks to prohibit officials from trading on prediction markets following the $400K Maduro wager.
#PredictionMarkets #USPolitics https://t.co/SgGankYd1U

— Cryptonews.com (@cryptonews) January 6, 2026

Lawmakers Aim to Address Insider Trading Loopholes in Prediction Markets

If enacted, the proposed legislation would prevent federally elected officials, political appointees, executive branch employees, and congressional staff from purchasing, selling, or trading prediction market contracts related to government policies, actions, or political outcomes.

The bill does not introduce new penalties but seeks to clearly apply existing insider trading regulations to prediction markets, which currently function within a fragmented regulatory landscape.

Torres indicated that the intersection of government activities and prediction markets poses a clear threat to public integrity, and officials should not be placed in a position where they could financially benefit from their actions.

Similar concerns were voiced by legal experts and economists, who contended that insider trading distorts market dynamics, undermines market confidence, and reduces the effectiveness of prediction markets as forecasting tools.

The legislation is co-sponsored by a broad coalition of House Democrats, including Pelosi, Rashida Tlaib, Brad Sherman, Seth Moulton, and numerous other senior lawmakers.

Proponents argue that the bill builds on the principles established by the STOCK Act, which regulates insider trading by congressional members in traditional financial markets, while adapting those regulations for emerging financial instruments.

Prediction Markets Experience Rapid Growth Amid U.S. Policy Changes

This initiative comes as prediction markets have seen swift expansion, with total trading volume across major platforms surpassing $44 billion in 2025, and weekly notional volume exceeding $5 billion in early January 2026.

Political events, especially elections and geopolitical crises, have emerged as some of the most actively traded markets.

At the federal level, the stance on prediction markets has shifted from an outright prohibition to a more lenient position following a series of judicial rulings.

In 2024, a federal court determined that the Commodity Futures Trading Commission had overreached its authority by prohibiting election-related prediction contracts, a ruling that was later upheld upon appeal.

Previous enforcement actions had driven platforms out of the U.S. market, with Polymarket blocked in 2022 after settling with the CFTC regarding the operation of an unregistered platform.

Similarly, Kalshi was prevented from offering election contracts in 2023 even though it functioned as a regulated exchange.

The CFTC abandoned its challenge in 2025 and has since embraced a more innovation-friendly stance, issuing no-action letters for specific event contracts in December 2025.

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