A congressman wants to criminalize insider trading on prediction markets

• The trades — including one placed on Friday that netted one unknown individual more than $400,000 in profits — led to widespread speculation that gamblers were basing their bets on material non-public information.
• While such insider trading in capital markets is already illegal and often prosecuted by the Justice Department and Securities and Exchange Commission, online prediction markets are far less regulated.

Driving the news: Rep. Ritchie Torres' (D-N.Y.) three-page bill, a copy of which was obtained by Axios, is called the Public Integrity in Financial Prediction Markets Act of 2026.

• It would ban federal elected officials, political appointees and bureaucrats from making insider trades on prediction sites sites such as Polymarket.
• Specifically, the bill prohibits such government officials from trading based on information that is not publicly available and that "a reasonable investor would consider important in making an investment decision."

Reality check: Congress has struggled for the last few years to agree on regulations for emerging tech sectors such as cryptocurrency and AI. There is little indication prediction markets will be an exception.

• It's not clear if House Speaker Mike Johnson (R-La.) would put Torres' bill to a vote in the House or if President Trump would sign it.

• Spokespeople for both men did not immediately respond to requests for comment.

What they're saying: Elisabeth Diana, a spokesperson for the prediction website Kalshi, noted that they are already regulated by the Commodity Futures Trading Commission and ban insider trading on their platform.

• "We're looking at the specifics of the bill, but we already ban the activity it cites and are in support of means to prevent this type of activity," she said.
• Diana added that the "activity from the past few days" did not occur on their platform.
• Polymarket did not immediately respond to requests for comment on Torres' bill.