U.S. Representative Ritchie Torres (D-NY) has introduced new legislation titled the "Public Integrity in Financial Prediction Markets Act of 2026" aimed at prohibiting federal officials from trading prediction market contracts. The bill, introduced during the 119th Congress, 2nd Session, seeks to prevent conflicts of interest and protect public trust by barring "covered individuals" from participating in transactions where they could use non-public information.
The legislation was prompted by heightened scrutiny following a specific incident on the prediction platform Polymarket. An account bet $30,000 that Venezuelan leader Nicolás Maduro would be ousted by January 31, 2026. Less than 24 hours after the bet was placed, the U.S. took Maduro into custody, allowing the trader to profit $400,000. This event raised significant concerns about the potential misuse of inside knowledge by individuals with access to sensitive government information.
The proposed ban would apply broadly to elected officials, political appointees, federal employees, members of Congress, White House staff, cabinet secretaries, federal regulators, and career bureaucrats. It criminalizes trades where officials either possess material nonpublic information relevant to the trade or could reasonably obtain such information through their official duties. This standard mirrors protections in traditional securities law for insider trading cases.
While prediction markets like Polymarket and Kalshi have grown in popularity for wagering on political and geopolitical events, the bill highlights the ethical gray areas they create for policymakers. Polymarket is noted as being partially owned by Donald Trump Jr., who sits on its advisory board. The legislation has been referred to committee for further consideration, with debate and potential amendments expected as it moves through Congress. The bill does not currently specify penalties for violations or which agency would enforce the prohibition.
