A bipartisan group in the U.S. Senate has introduced a new bill that would ban public officials from trading in financial prediction markets with confidential information. This initiative, called the Public Integrity in Public Financial Forecast Markets Act, aims to prevent high-level government officials from gaining financial advantage. This includes the president, vice president, members of Congress, political appointees and federal agency employees.
Rules and sanctions foreseen in the bill
Under the proposed law, each contract transaction exceeding $250 must be reported to the relevant ethics audit unit within 30 days. The data notified includes the price and time traded, the type of position, the platform used and the profit or loss obtained.
In the law, all non-public official information that can be considered as inside information is specifically stated. Policy, regulatory decisions and unannounced government actions are considered in this context if they are deemed not to have been made public.
When such irregular transactions are detected, the bill stipulates a fine equal to twice the profit made. Thus, the regulation is aimed to eliminate financial incentives. These regulations may lead to scrutiny not only of individual participants but also of platforms. Particularly prominent prediction markets such as Kalshi and Polymarket may be subject to detailed examination once the relevant regulations come into force.
Senator Elissa Slotkin emphasized that the bill should completely prevent MPs from gaining profits through privileges arising from their ordinary positions, and pointed out that the bill includes strong sanctions.
Details of the bills and current market impacts
Before the new law submitted to Congress, another regulation called the PREDICT Act was proposed in the House of Representatives. This proposal is based on the principle of civil fines for transactions made with insider information in prediction markets and the transfer of all profits to the Treasury. However, the law also covers a broader circle, including officials’ spouses and dependent children.
The current senate proposal envisages establishing a transparent notification and detailed monitoring system to prevent border violations, especially by state officials. In addition, one of the prominent aspects of the proposal is that it has details that match the internal regulations of the platforms that they have previously updated. It is argued that such regulations could be the beginning of a comprehensive monitoring period in prediction markets.
Member of the House of Representatives, Adrian Smith, stated that the regulation was prepared with common sense and thus aims to give the public confidence that the decisions of the authorities are not taken for personal gain.
The recent succession of legislative proposals has shown that the US Congress has begun to seriously address transaction risks in prediction markets. The controls to be carried out at both personal and platform levels are expected to directly affect users and industry actors. Particularly leading platforms such as Kalshi and Polymarket may face new compliance processes depending on the content of these regulations.
In addition, a separate initiative presented in the Senate at the beginning of the week includes sports prediction contracts made through platforms within the scope of additional regulation. Thus, it is envisaged that a comprehensive legal framework will extend not only to political events but also to different products in the prediction markets.
