Washington, D.C. — A new bipartisan proposal, the Predict act, is rapidly becoming a focal point in Washington’s escalating crackdown on prediction markets, as lawmakers seek to curb insider-driven trading tied to sensitive government decisions.
Introduced on March 25, 2026, by Representatives Adrian Smith and Nikki Budzinski, the Predict act—formally known as the Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act—aims to prohibit top federal officials and their immediate families from profiting off bets linked to government actions.
The Predict act arrives at a moment of intensifying scrutiny over the fast-growing prediction market sector, where users trade contracts based on the outcomes of real-world events, from elections to geopolitical developments.
Lawmakers Draw a Hard Line on Insider Access
At the core of the Predict act is a sweeping ban on trading political and policy-related event contracts by individuals with potential access to non-public information. This includes members of Congress, the president, vice president, political appointees, and their spouses and dependent children.
Under the Predict act, violators would face financial penalties, including a civil fine equal to 10% of the contract’s value, while any illicit profits would be forfeited to the U.S. Treasury.
Budzinski pointed to troubling patterns in recent trading activity, stating, “We’ve seen instances of little-known traders making massive profits,” particularly on contracts tied to war scenarios and government funding standoffs.
Smith echoed the concern, framing the Predict act as an ethical safeguard: “Public service must never become a pathway to profit.”
The Predict act aligns with broader legislative efforts to close loopholes that allow officials—or those close to them—to benefit from privileged insights. Existing proposals already define such trades as involving “material nonpublic information,” a standard commonly used in financial market regulation.
Predict Act Emerges Amid Broader Legislative Blitz
The Predict act is not an isolated initiative. It forms part of a wider legislative wave targeting prediction markets, which have exploded in popularity and volume in recent months.
On March 17, Senator Chris Murphy and Representative Greg Casar introduced the BETS OFF Act, a proposal that would prohibit wagering on high-stakes events such as wars, terrorism, and assassinations.
Murphy’s office cited suspicious trading activity ahead of military operations involving countries like Iran and Venezuela, raising fresh alarms about potential misuse of insider knowledge.
Similarly, Senators Adam Schiff and John Curtis unveiled the Prediction Markets Are Gambling Act on March 23, targeting sports-related contracts.
“Sports prediction contracts are sports bets,” Schiff said, arguing that such products should fall under state gambling laws rather than federal oversight.
Curtis reinforced that stance, insisting that these markets are operating in all 50 states—even where traditional betting is restricted—highlighting what lawmakers see as a regulatory loophole.
Against this backdrop, the Predict act is gaining traction as a targeted solution focused specifically on insider trading risks, distinguishing it from broader bans.
Industry Under Pressure as Platforms Tighten Rules
The rise of the Predict act coincides with mounting legal and regulatory pressure on prediction market platforms such as Kalshi and Polymarket.
A Nevada judge recently moved to temporarily block Kalshi from offering event contracts without proper licensing, underscoring the legal uncertainty surrounding the industry.
At the same time, platforms are attempting to preempt regulatory crackdowns by strengthening internal controls. Kalshi has barred political candidates from trading on markets tied to their own campaigns, while Polymarket has introduced restrictions on users with access to confidential or outcome-influencing information.
These measures reflect growing recognition within the industry that credibility hinges on preventing insider manipulation—one of the central concerns addressed by the Predict act.
Predict Act Signals Turning Point for Market Oversight
The introduction of the Predict act marks a critical juncture in the evolution of prediction markets, which have rapidly transitioned from niche tools to mainstream financial instruments.
While proponents argue that these markets improve forecasting by aggregating collective intelligence, critics warn that they create incentives for unethical behavior—especially when participants can influence or foresee outcomes.
Recent reports of traders profiting from geopolitical developments have intensified those concerns, with lawmakers warning that such activity risks undermining public trust.
The Predict act, therefore, is more than a compliance measure—it is part of a broader attempt to define the boundaries between financial innovation and regulated gambling.
Whether the Predict act ultimately becomes law remains uncertain. Multiple competing bills are currently under consideration, and any final legislation will need to reconcile differing views on whether prediction markets should be treated as financial instruments or betting platforms.
Still, the momentum behind the Predict act is unmistakable. As policymakers move to rein in the sector, the message is clear: access to power—and information—must not translate into profit.
For now, the Predict act stands as one of the most focused and politically viable efforts to restore integrity to a rapidly evolving market—one that is increasingly shaping how the world prices the future.
