A new bill would prevent members of Congress from betting on prediction markets
CFTC Chairman Michael Selig sets forth proposed rules for prediction markets, specifying acceptable contracts for sporting events and prohibiting trade in war, terrorism, or murder to prevent offshore operations.
The new bill would prevent lawmakers in Congress from betting on prediction markets related to public policy issues and elections that they would be in a position to benefit from using insider information.
The Stop Lawmakers From Predicting Act was introduced Thursday by House Judiciary Committee Chairman Bryan Steil, R-Wis., which would prevent members of Congress and their spouses and dependents from placing bets in the prediction market on topics a lawmaker may have insider knowledge about.
The ban will include bets on the probability, impossibility or rate of occurrence of certain government policies and actions, the political outcome or any other event that has come to the attention of the protected person as a direct or indirect result of legislative service in Congress.
“The American people should know that their Member of Congress does not benefit from inside information,” Steil said. “This law is important to restore public trust in elected officials. Legislators must write policy, not worry about its results.”
SENATE SILENTLY PREVENTS LAWMAKERS FROM BETTING IN SECURITY MARKETS
Rep. Bryan Steil, R-Wis., is the chairman of the House Judiciary Committee and introduced the Legislature Stopping the Forecasting Act. (Andrew Harnik/Getty Images)
Steil’s bill would penalize violators of the law that prohibits lawmakers from placing political and policy bets in the speculative markets with an amount equal to $2,000 or 10% of the value of the prohibited transaction, whichever is greater, plus the net profit from the payment.
The bill would also prohibit lawmakers from using the Member Representation Allowance, Senate staff and office expense account, or political contributions or donations to pay the fine.
Lawmakers who resign or retire without paying a fine could be referred to the Department of Justice for enforcement if the bill becomes law.
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The Senate previously took steps to prevent lawmakers from betting on prediction markets by changing chamber legislation. (Demetrius Freeman/The Washington Post via Getty Images)
Steil’s introduction of the proposed market ban to lawmakers comes after his panel, the House Judiciary Committee, advanced the Stop Insider Trading Act in the House in January, which focused on insider trading in the stock market.
It also follows an incident in March in which blockchain analysts identified suspected insiders who placed suspiciously timed bets on prediction markets related to the Iran conflict, including markets related to the US striking Iran and the death of Ayatollah Ali Khamenei.
Bets produced huge profits and could have been placed using insider information.
DO MEMBERS OF CONGRESS USE ONLINE FORECAST MARKETS? DON’T FALL ON IT
Some predictable market bets related to strikes on Iran and the death of Iran’s Supreme Leader Ali Khamenei are suspected to have included insider information. (Office of the Supreme Leader of Iran via Getty Images)
The Senate in April passed the resolution brought by Seni. Bernie Moreno, R-Ohio, who changed the upper chamber’s internal rules to prevent lawmakers and their staff from placing bets on prediction markets. Leading prediction markets Kalshi and Polymarket expressed support for the effort at the time.
A broad bipartisan bill aimed at regulating prediction markets has also been introduced in the Senate by Sens. Dave McCormick, R-Pa., and Kirsten Gillibrand, DN.Y. Their Prediction Market Act would also reduce insider trading in prediction markets while establishing regulatory frameworks to protect clients and retail investors.
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A House bill introduced by Steil that focuses on keeping lawmakers and their families from placing political and policy bets on speculative markets may be considered by the House Governance Committee. It would need to pass the House and Senate, and be signed by President Donald Trump to become law.
