Legislators Move to Restrict Prediction Markets Amid Concerns

By: Eva Baxter

Amid growing concerns over insider trading within prediction markets, a new bill has been introduced by US lawmakers aiming to clamp down on government officials’ involvement in these platforms. The legislation, known as the Public Integrity in Financial Prediction Markets Act of 2026, was introduced by Representative Ritchie Torres and backed by over 30 Democrats. This move comes in the aftermath of a controversial gain by a Polymarket user who reportedly netted more than $400,000 from a contract related to the Venezuelan political landscape. The new bill seeks to prohibit federal elected officials, political appointees, Executive Branch employees, and congressional staff members from engaging in prediction market contracts when armed with material nonpublic information or when they could reasonably acquire such information through their professional duties.

Following a parallel effort, New York Assemblyman Clyde Vanel reintroduced legislation aimed at regulating prediction markets within the state. Known as the Oversight and Regulation of Activity for Contracts Linked to Events, or ORACLE Act, this bill targets a range of event-based markets, including those related to politics, sports, and stock trading. The ORACLE Act is designed to curtail the potential market manipulation that could arise from inside information being leveraged within open markets.

The issue of prediction markets has gained traction as their popularity surges, providing users with opportunities to wager on various outcomes. However, the bipartisan legislative moves reflect escalating apprehensions regarding the ethical implications of insider trading in such speculative platforms. Notably, the dilemma centers around whether individuals in positions of authority might exert or abuse their access to privileged information to influence these markets.

Both Torres's and Vanel's legislative proposals underscore a significant attempt by lawmakers to address the risks associated with prediction markets. While offering a platform for speculation on major events, these markets also raise profound questions about fairness and equity, particularly when information asymmetry could significantly impact outcomes. As lawmakers proceed with these legislative frameworks, they highlight the fine balance required to nurture innovation in financial technologies while safeguarding public integrity.