The U.S. plans to ban officials from participating in prediction market trading, as insider trading risks prompt regulatory upgrades.

Gate News: U.S. Congress members are pushing for key legislation targeting prediction markets, proposing a comprehensive ban on presidents, members of Congress, and senior government officials from participating in related trading. The bill, jointly introduced by Adrian Smith and Nikki Budzinski, is called the “PREDICT Act,” focusing on cracking down on insider trading for profit in political and policy events.

Budzinski pointed out that recently, some traders have made significant profits by betting on sensitive events like the Iran conflict and government shutdowns, causing concerns over information asymmetry in the market. The new law will restrict presidents, vice presidents, members of Congress, and political appointees from engaging in prediction market trading, with the scope also covering spouses and dependents.

Under the proposal, violators could face fines equal to 10% of the total contract value and be required to turn over all profits to the U.S. Treasury. Legislators emphasize that this move aims to close regulatory loopholes and prevent those with policy information from profiting.

Meanwhile, U.S. regulators continue to tighten scrutiny of prediction markets. Investigations are underway at federal and state levels regarding the legality of contracts related to politics, sports, and war. More than 10 states have filed or are preparing to file lawsuits against related platforms, focusing on whether their products constitute disguised gambling.

Additionally, John Curtis and Adam Schiff have proposed another bill to ban prediction contracts similar to sports betting from operating under regulatory frameworks, criticizing the leniency of current regulatory agencies toward the industry. In response to policy pressure, platforms like Kalshi and Polymarket have begun tightening rules to restrict participation by certain groups.

Analysts believe the U.S. is trying to balance innovative financial tools with market fairness. Prediction markets may face stricter compliance in the future, which could have a profound impact on capital flows and market activity.