Prediction markets are a topic of hot controversy on Capitol Hill in Washington DC right now and one lawmaker is taking steps to ensure he and his staff stay out of any prospective headlines.
Congressman Seth Moulton has barred his team from trading on prediction market platforms like Kalshi and Polymarket. Both companies are facing multiple legal issues in the courts over recent months.
Moulton calls prediction markets “a playground for corrupt insiders”
The Massachusetts politician announced the ban on Wednesday evening in a statement, with his office calling it the first of his kind in congress.
He posted on the social media platform X: “Prediction markets have become a playground for corrupt insiders who are able to place bets on things like election outcomes, wars, and even the deaths of public figures. This is creating a perverse incentive structure that poses a genuine threat to American society today.
“My office has not, and will not, engage in these trades that run counter to every principle of a clean, honest government that works for the people.”
Moulton was one of 30 Members of Congress to sign the Public Integrity in Financial Prediction Markets Act of 2026 back in January. It is a bill that bars federal elected officials, political appointees, Executive Branch employees, and congressional staff from trading prediction market contracts related to government policy, actions, or political outcomes if they hold, or could reasonably access through their roles, material nonpublic information.
The bill came to pass in the aftermath of the arrest of Venezuelan president Maduro, when an individual with a brand new account on Polymarket placed a bet of over $30,000 that the dictator would be removed from office by the end of January. A few days later, he was in police custody.
STOP Corrupt Bets Act launched Thursday
Elsewhere, Sens. Jeff Merkley, D-Ore., Elizabeth Warren, D-Mass., and Rep. Jamie Raskin, D-Md.introduced sweeping legislation on Thursday targeting prediction market companies like Kalshi and Polymarket. The STOP Corrupt Bets Act would place wider restrictions on prediction markets than most other proposals and comes amid a surge of legislative efforts to curb the fast-growing platforms.
Announcing the act, “Merkley said in a statement: “When anyone can use prediction markets to make a well-timed bet on Congress passing a bill, government decisions, or a military strike, it’s ripe for corruption and erodes public trust,.The STOP Corrupt Bets Act restores the original intent of prediction markets and prevents these markets from further eroding our democratic institutions and turning them into a casino.”
There have been at least five other bills introduced to go with the Financial Prediction Markets Act of 2026 and the STOP Corrupt Bets Act so far in 2026.
The Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act, or PREDICT Act, from Rep. Adrian Smith and Rep. Nikki Budzinski would bar government officials and their families from trading on such platforms. The Prediction Markets Are Gambling Act, introduced by Sens. Adam Schiff and John Curtis, would prevent platforms regulated by the Commodity Futures Trading Commission (CFTC) from offering sports event contracts.
Sen. Amy Klobuchar has also proposed legislation targeting insider trading by government officials, while in February, Rep. Dina Titus suggested a bill that would prohibit sports event contracts and casino-style games on prediction market platforms. More recently, Reps. Blake Moore and Salud Carbajal introduced a bill that would ban several types of event contracts, including those tied to sports.
Kalshi and Polymarket stand firm
The platforms argue that sports-related event contracts fall under the sole authority of the CFTC, whose leadership has expressed support for the sector. A spokesperson for Kalshi, Elisabeth Diana, said lawmakers and their staff are already prohibited on the exchange and defended such contracts as a “fairer” option for consumers, without the incentives used by traditional betting operators. She also warned that banning the products would likely drive activity to offshore platforms with little or no oversight, a pointed reference to rival Polymarket.
At the same time, the industry has faced scrutiny over several high-profile cases involving suspected insider trading tied to geopolitical events. Reports have highlighted suspiciously timed bets around U.S. military actions. In one instance, authorities in Israel arrested several individuals suspected of placing bets on Polymarket using classified information linked to military operations.
Kalshi has sought to demonstrate it is actively policing such behavior. The company recently said it banned and fined two traders found to have used insider information and has expanded its safeguards against market manipulation, including new technology designed to block politicians, athletes and other insiders from trading in certain markets. The platform has also opened hundreds of investigations into potential violations, underscoring its stance that insider trading is prohibited.
