Thursday was a busy day for prediction markets on Capitol Hill, as the legislative pile-up targeting the event contract exchanges reached a new peak. Lawmakers introduced two separate proposals to restrict the sector from different regulatory angles, including the STOP Corrupt Bets Act.
Rep. Jamie Raskin (D-MD) and Sen. Jeff Merkley (D-OR) introduced the bicameral bill, which targets prediction market contracts tied to elections, military operations, and government actions, making it one of the most ambitious proposals aimed at the fast-growing sector.
This bill dropped the same day that Sens. Elissa Slotkin (D-MI), Todd Young (R-IN), Adam Schiff (D-CA), and John Curtis (R-UT) introduced separate bipartisan legislation focused on insider trading by government officials, showing just how quickly momentum to rein in prediction markets is growing in Washington.
The fact that these bills are being introduced simultaneously suggests that lawmakers are pursuing a coordinated, multi-pronged strategy to tackle prediction markets from different angles rather than advancing a single, unified bill.
If this approach succeeds, it would see Congress place limits on a sector that Schiff has described as the “Wild West.”
Bill Targets Betting on Elections, War & Government Decisions
The STOP Corrupt Bets Act is more expansive than some recent proposals. Instead of taking a narrow approach that focuses on ethics or market integrity, this bill would ban entire categories of event contracts.
As written, it would amend the Commodity Exchange Act to prohibit registered entities from listing or trading contracts involving specific “matters described,” including elections, sporting events, and military actions that the bill’s sponsors argue lack commercial hedging value and effectively function as unregulated gambling.
It goes beyond other proposals that only place restrictions on government officials, because it bans everyone from placing these wagers.
The bill explicitly bans event contracts on:
- Political elections or contests
- Government actions taken by the executive, legislative, or judicial branches
- Sporting events or athletic competitions
- Military actions taken by the United States or any foreign country
In the press release announcing the bill, Raskin said:
“The oligarchs and opportunists are using prediction markets like Kalshi and Polymarket to enrich themselves. By banning bets on elections, legislation, acts of war and other government actions, we can oppose corrupt attempts to rig our democracy and profit from the fix, and we can redeem public faith in the idea that government is an instrument for the common good and not a casino.”
The proposed legislation specifically goes after event contracts that could be influenced or even known in advance by government insiders, as well as those that could pose a risk to national security.
Lawmakers have increasingly voiced concerns that markets related to war and geopolitics could create perverse incentives or expose vulnerabilities in the handling of sensitive information.
It does carve out a narrow exception for contracts used for “hedging or mitigating commercial risk,” but it tasks the Commodity Futures Trading Commission with defining the specific parameters.
This bill draws a bright line around which events should be completely off-limits, rather than regulating how participants engage with them, making it one of the most aggressive proposals to date.
If enacted, the bill would require the Government Accountability Office to study the impact of prediction markets on young people, insider trading, and related issues.
Lawmakers Take Multiple Approaches as Legislation Piles Up
One way to think about the current approach to prediction markets on Capitol Hill is a “death by a thousand cuts” strategy. Lawmakers have introduced various bills, many with overlapping goals and even overlapping sponsors. For example, Sens. Schiff and Curtis are attacking the industry from multiple legal perspectives simultaneously, with both co-sponsoring more than one proposal targeting prediction markets.
This layered approach might ensure that if one of the bills doesn’t gain traction or faces constitutional challenges, another might survive. While some legislation focuses on the ethics of government officials trading on nonpublic information, other bills address regulatory “backdoors” by reclassifying event contracts as traditional sports betting or casino-style gambling.
Then, there’s the Prediction Markets Security and Integrity Act introduced by Sens. Richard Blumenthal (D-CT) and Andy Kim (D-NJ), which combines insider trading bans with wagers on war and specific consumer protections like age verification and credit card bans.
More than anything else, the multiple measures are a sign that Congress is serious about closing the loopholes in the current regulatory framework.
