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A group of congressional Democrats on Thursday introduced legislation to ban prediction market bets on elections, government actions, war, and sports. The move came as scrutiny intensified around Kalshi, Polymarket, and other fast-growing platforms. Lawmakers tied the bill to recent bets on global events, including Nicolas Maduro’s ousting and the war in Iran.
Sens. Jeff Merkley and Elizabeth Warren, along with Rep. Jamie Raskin, lead the measure. Merkley said well-timed bets on Congress, government decisions, and military strikes invite corruption and weaken public trust. He said the STOP Corrupt Bets Act would restore the original intent of prediction markets.
The proposal marks the latest effort to slow a market that has grown quickly. It would impose broader limits than many other pending measures. It would also clarify that these markets conflict with the intent of federal law governing contract trading.
The new bill follows several related proposals on Capitol Hill. Sens. Adam Schiff and John Curtis introduced a separate measure to ban sports prediction market contracts. They argue that those contracts amount to gambling and face little regulation.
Kalshi rejected that argument in a statement to CNBC on Wednesday. The company said casino interests drove the bill because they feared competition. Kalshi also said those interests care more about protecting monopolies than consumers.
At the same time, a bipartisan House group introduced legislation on Wednesday to bar members of Congress, the president, and other executive branch officials from trading in certain prediction markets. Earlier this month, Merkley and Sen. Amy Klobuchar introduced a similar measure. This proposal would block elected officials from profiting from prediction markets.
As lawmakers increased pressure, Kalshi and Polymarket both announced new insider trading protections this week. Those moves arrived as political and regulatory attention grew. The latest bill adds another layer to that debate.
Merkley said the proposal would return gambling oversight to the states. It would also require the Government Accountability Office to study prediction markets and insider trading. Congress’s non-partisan watchdog would conduct that review.
At least 20 lawsuits already challenge prediction markets. States and gaming regulators argue that the platforms create a gambling loophole. They also argue that states should regulate that activity rather than federal authorities.
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For Polymarket, the bill adds to an already complex US regulatory picture. The crypto-native platform settled with the Commodity Futures Trading Commission in 2022. It paid a $1.4 million fine and agreed to wind down its US-facing operations.
This settlement bars American users from Polymarket. However, the PREDICT Act targets a different issue. Instead of limiting user access, it would bar certain individuals from participating regardless of the platform.
The question cuts to the enforcement challenge. Kalshi, as a regulated exchange, can use identity verification to screen prohibited users. By contrast, decentralized on-chain protocols lack a built-in way to confirm whether a wallet belongs to a member of Congress.
Democrats have introduced a broad bill to ban prediction market bets on elections, war, government actions, and sports as scrutiny around Kalshi and Polymarket grows. The proposal would also study insider trading risks and push more gambling oversight back to the states.
