A House Democrat is moving to crack down on insider trading in online prediction markets, introducing legislation that would bar government officials from placing politically sensitive bets based on nonpublic information, Axios reported Monday.
Rep. Ritchie Torres, D-N.Y., is proposing the Public Integrity in Financial Prediction Markets Act of 2026, a three-page bill that would prohibit federal elected officials, political appointees, and bureaucrats from trading on prediction platforms using privileged information.
The proposal follows reports that traders on the prediction site Polymarket made massive profits betting on the downfall of former Venezuelan President Nicolas Maduro shortly before he was extradited to the U.S. over the weekend.
One bet placed Friday reportedly earned more than $400,000, fueling speculation that insiders may have acted on nonpublic information ahead of the arrest, the report said.
While insider trading is already illegal in traditional financial markets and enforced by the Justice Department and Securities and Exchange Commission, prediction markets operate in a murkier regulatory space and face far less oversight.
Torres' bill would ban government officials from trading based on information not publicly available and deemed significant enough that a "reasonable investor" would consider it important when making a decision, Axios reports.
Still, the legislation faces an uphill climb. Congress has struggled in recent years to agree on regulations governing emerging sectors such as cryptocurrency and artificial intelligence, and prediction markets may prove no different.
It remains unclear whether House Speaker Mike Johnson, R-La., would bring the bill to a vote or whether President Donald Trump would sign it into law.
In response, Elisabeth Diana, a spokeswoman for prediction platform Kalshi, told Axios the company is already regulated by the Commodity Futures Trading Commission and prohibits insider trading.
"We already ban the activity it cites and are in support of means to prevent this type of activity," Diana said, adding that the recent high-profile trading activity did not occur on Kalshi's platform.
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