Bipartisan PREDICT Act targets political trading as scrutiny widens to war-linked and sports contracts
Washington Targets Insider Trading in Prediction Markets
US lawmakers have launched a coordinated push to restrict insider participation in prediction markets, introducing the bipartisan PREDICT Act on March 25, 2026.
The bill would bar:
- Members of Congress, the president, vice president, and political appointees
- Their spouses and dependent children
From trading on government actions, policy decisions, and political outcomes.
At stake is a simple question: should those shaping events be allowed to bet on them?
PREDICT Act: Scope and Penalties
Introduced by Representatives Adrian Smith and Nikki Budzinski, the legislation aims to curb real-time exploitation of privileged information.
Key provisions include:
- A 10% civil fine on contract value for violations
- Mandatory disgorgement of profits to the US Treasury
Budzinski pointed to “little-known traders making massive profits” tied to war and funding events, raising red flags over information asymmetry.
Broader Crackdown: War, Terror, and Policy Bets
The proposal lands amid escalating concern over event-based contracts tied to sensitive outcomes.
On March 17, lawmakers introduced the BETS OFF Act, targeting markets linked to:
- War and military actions
- Terrorism and assassinations
- Events where participants may influence outcomes directly
Reports of unusual trading activity before military developments involving Iran and Venezuela have intensified scrutiny.
If markets begin pricing geopolitical shocks, who ensures those prices aren’t manipulated from within?
Sports Contracts Under Fire
Congress isn’t stopping at politics. A parallel effort now targets sports-linked prediction contracts.
On March 23, Senators Adam Schiff and John Curtis introduced legislation to:
- Ban CFTC-regulated platforms from listing sports-like contracts
- Reclassify such products closer to gambling frameworks
Schiff argued plainly: “Sports prediction contracts are sports bets.”
Their concern? These products already operate nationwide, even in states with strict gambling laws.
Platforms Caught Between Regulation and Reinvention
Prediction market platforms face mounting pressure from both lawmakers and state regulators.
- A Nevada court temporarily blocked Kalshi from offering contracts without a license
- Ongoing debate: financial instruments vs. unlicensed gambling
Meanwhile, platforms are tightening internal controls:
- Kalshi banned candidates from trading on their own races
- Polymarket restricted users with inside knowledge or direct influence
The industry now stands at a regulatory crossroads—adapt or face fragmentation.
TL;DR
US lawmakers are pushing new bills to ban insider trading on prediction markets. The PREDICT Act targets officials and families, while separate proposals crack down on war-linked and sports contracts. Platforms also face state-level action and tightening compliance rules.
AI Summary
- PREDICT Act bans officials from trading on government outcomes
- Penalties include fines and profit forfeiture
- BETS OFF Act targets war, terror, and policy-linked contracts
- Separate bill aims to curb sports prediction markets
- Platforms face legal pressure and stricter internal rules
