US Congressman Moves to Ban Staff From Trading on Prediction Markets

A predictive market analyst says more congressional offices are likely to follow the lead of Massachusetts Democrat Seth Moulton (D-MA) after he became one of the first members of Congress to ban his staff from trading on platforms like Polymarket and Kalshi.

Effective Wednesday, Rep.’s office-wide policy prohibits Moulton all personnel, including district, legislative, communications and operational staff, to act or hold positions on political, legislative, regulatory or geopolitical outcomes, or on any information obtained in an official capacity.

“Prediction markets have become a playground for corrupt insiders who can place bets on things like election results, wars and even the deaths of public figures,” Moulton said in an interview. statement. “This creates a perverse incentive structure that poses a real threat to American society today.”

The ban comes amid a growing push from lawmakers on both sides of the aisle to crack down on insider trading in prediction markets, a concern that has arisen as anonymous traders have made outsized profits on politically sensitive events, fueling suspicion that government insiders are making money from non-public information.

“I think everyone is very aware of the potential for and optics around insider trading around government actions,” forecast market analyst Dustin Gouker told me. Declutternoting that he expects “many other congressional offices will take similar actions, even if done publicly.”

“I think it’s pretty clear that insider trading on the events in Washington is not kosher or welcome in the CFTC-regulated prediction markets,” Gouker said. “Introducing clear and meaningful penalties into the law would make it abundantly clear,” although he acknowledged some might still try to do so.

Also on Wednesday, Reps. Adrian Smith (R-NE) and Nikki Budzinski (D-IL) introduced the FORECAST Actor the Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act.

The bipartisan bill seeks to ban members of Congress, their spouses and dependent children, the president and vice president, political appointees and other senior officials from trading on political events, policy decisions or government actions in prediction markets.

Violations would carry a civil penalty of 10% of the value of the transaction, plus full restitution of profits to be deposited to the U.S. Treasury Department.

Lawmakers have taken swift action in recent days, with Senators Adam Schiff (D-CA) and John Curtis (R-UT) speaking last week propose a ban on sports-related contracts on CFTC-registered platforms, followed Tuesday by Senator Chris Murphy (D-CT) and Representative Greg Casar (D-TX) unveiling of the BETS OFF law targeting markets related to terrorism, assassinations and war.

The push follows investigation into controversial betting US attacks on Iran and highly profitable bets related to the arrest of Nicolás Maduro from Venezuelaraising concerns about possible insider trading.

As lawmakers step up scrutiny, Polymarket and Kalshi introduced stronger measures against insider trading, combining stricter policies with improved monitoring and surveillance capabilities.

Gouker, however, tempered expectations about how clean the markets could ever become.

“Achieving 100% is probably an impossible ideal,” he said, referring to completely eliminating insider trading, but noting that “better regulations, laws and supervision could probably make it much more difficult.”

Declutter has contacted Polymarket and Kalshi for comment.