US Lawmaker Proposes Bill to Prevent Insider Trading on Prediction Markets

US Representative Ritchie Torres plans to introduce the Public Integrity in Financial Prediction Markets Act of 2026. This legislation aims to prevent insider trading on prediction markets by prohibiting federally elected officials, political appointees, and executive branch staff from trading when they possess nonpublic information due to their roles.

Key Details

A Polymarket account wagered $32,500 on Venezuelan President Nicolas Maduro's capture, earning over $400,000 within 24 hours following US action.
The trade raised concerns of insider trading as the bet preceded a public announcement.
The bill seeks to extend existing rules from traditional securities markets to online prediction exchanges.
Regulators would clarify which platforms are covered and how violations will be enforced.

Market Reaction

Platform operators claim their terms prohibit trading on nonpublic information, though enforcement is challenging.
Analysts highlight a gap between policy and oversight, while some fear overregulation could hinder market research.
Investigations may explore the account’s origins and potential connections to insiders.
New rules could redefine legal participation in betting on political and national security events.