Republican lawmakers propose banning insider trading in prediction markets, while White House officials are exempt.

According to WooFun.AI news, Brian Steil, a Wisconsin state representative and chairman of the House Digital Assets Subcommittee, officially introduced the "Prohibition of Predictive Betting by Legislators Act" on Thursday, aiming to curb public officials from profiting from insider information in prediction markets. The bill explicitly prohibits members of Congress, their spouses, and dependent children from engaging in event contract betting on platforms such as Kalshi and Polymarket, regarding public policy issues, government actions, and political outcomes (including election results). If the bill is passed by Congress and signed by the president, it will take effect within 180 days of enactment, and violators will face a $2000 fine or a penalty of 10% of the illegal betting amount. WooFun AI analysis found that the background of this legislative initiative stems from a recent case that drew strong public attention: a soldier made a bet on the expulsion of Venezuelan President Nicolas Maduro by the US military and earned over $400,000 in profit. This event highlights the potential insider trading risks in prediction markets involving sensitive political and military information, prompting members of Congress to accelerate related regulatory measures. While Steil's proposal does not completely ban legislators from using prediction market platforms or participating in sports betting, its core focus is on preventing improper gains from utilizing policy insider information. However, there is a significant regulatory gap in the bill: White House officials are not included in the prohibition. This means that high-ranking executive branch officials such as President Donald Trump and Vice President Mike Pence could theoretically still participate in such betting. It is worth noting that Trump's son, Donald Trump Jr., currently holds dual roles as a strategic advisor for Kalshi and an advisor for Polymarket, with Polymarket hosting the UFC Freedom 250 event at the White House on Sunday. The deep ties between the executive branch and prediction market platforms have raised deep concerns about the fairness of the bill's exemption clauses. WooFun AI notes that there is already a fierce legal battle at the federal level over the jurisdiction of regulating prediction markets. During the Trump administration, the Commodity Futures Trading Commission and its chairman, Michael Selig, claimed exclusive jurisdiction over regulations related to prediction markets. The CFTC has filed lawsuits against several state authorities attempting to restrict or ban such platforms, arguing that event contracts should be classified as "swaps" rather than regular betting activities under the Commodity Exchange Act. This stance directly challenges the regulatory authority of some state governments. Currently, this dispute over the legal classification of prediction markets is likely to be ultimately decided by the Supreme Court. While Steil's proposal attempts to address regulatory loopholes in insider trading by legislators, the exemptions for White House officials and conflicts between federal and state regulatory authority make the actual impact of the bill uncertain. In the future, with the possible involvement of the Supreme Court, the compliance framework for prediction markets may undergo fundamental reshaping.