Congressman Bans Staff From Prediction Markets

Prediction markets just got their first serious political blowback — and it came fast. Rep. Seth Moulton (D-MA) on March 25, 2026, became one of the first U.S. congressmembers to formally prohibit his staff from trading on prediction market platforms, citing what he called a corruption risk baked into the entire incentive structure. The ban covers everyone in his office — district staff, legislative aides, communications teams, operations personnel — and extends to any position derived from information picked up in an official government capacity.

What Did Moulton Actually Ban?

The policy is blunt. Every staffer in Moulton's congressional office is now prohibited from trading or holding positions on Polymarket, Kalshi, or any similar platform tied to political, legislative, regulatory, or geopolitical outcomes. That last clause matters — it's not just "don't bet on elections." It means staff can't trade on anything they might learn through their jobs in the Capitol.

Moulton framed this as a direct response to what he sees as structural rot. Seth Moulton described prediction markets as "a playground for corrupt insiders who are able to place bets on things like election outcomes, wars, and even the deaths of public figures." His statement called the incentive structure "a genuine threat to American society."

That's not boilerplate legislative language. That's a congressman saying the market itself is the problem — not just bad actors operating within it.

Prediction markets have become a playground for corrupt insiders who are able to place bets on things like election outcomes, wars, and even the deaths of public figures. This is creating a perverse incentive structure that poses a genuine threat to American society today.

The PREDICT Act: Congress Moves to Legislate

Moulton wasn't the only one acting on March 25. The same day his office ban took effect, Reps. Adrian Smith (R-NE) and Nikki Budzinski (D-IL) introduced the PREDICT Act — the Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act. Bipartisan, which is notable given how little gets done on a bipartisan basis right now.

The bill would prohibit members of Congress, their spouses and dependent children, the President and Vice President, political appointees, and senior officials from trading on political events, policy decisions, or government actions on prediction markets. Penalties are concrete: a civil fine of 10% of the transaction value, plus full disgorgement of profits paid directly into the U.S. Treasury.

This isn't a symbolic gesture. Disgorgement plus a percentage fine is the kind of teeth that changes behavior — assuming enforcement follows. That's the part worth watching.

The PREDICT Act also fits into a broader legislative sprint that's been picking up speed. Last week, Senators Adam Schiff (D-CA) and John Curtis (R-UT) proposed a ban on sports-related contracts on CFTC-registered platforms. Then on Tuesday, Sen. Chris Murphy (D-CT) and Rep. Greg Casar (D-TX) unveiled the BETS OFF Act, targeting markets tied to terrorism, assassinations, and war. Three separate legislative efforts in under a week. Washington is paying attention.

Why Prediction Markets Are Under Fire Right Now

The scrutiny isn't coming from nowhere. Anonymous traders have made suspiciously well-timed, highly profitable bets on politically sensitive events — including U.S. military strikes on Iran and the capture of Venezuelan president Nicolás Maduro. Whether those gains came from insider knowledge or extraordinary luck is legally unresolved, but the optics have been catastrophic for an industry that was trying to go mainstream.

Dustin Gouker, a prediction market analyst, told reporters he expects congressional offices across the board to respond similarly to Moulton — even if not all of them announce it publicly. "I think everyone is very conscious of the potential for and optics around insider trading around government actions," Gouker said.

In response to the mounting pressure, Polymarket and Kalshi have already introduced stronger anti-insider trading measures — stricter policies, upgraded monitoring, enhanced surveillance. The platforms are clearly trying to get ahead of the regulatory wave before it crashes.

I think it's quite clear that insider trading on things going on in Washington isn't kosher or welcome at CFTC-regulated prediction markets. Creating clear and meaningful penalties by law would make it abundantly clear.

Can Regulation Actually Clean Up These Markets?

Here's where Gouker gets honest in a way that most industry observers don't. Asked about the realistic upside of stricter rules, he acknowledged that getting to 100% compliance is "probably an impossible ideal." But — and this matters — he said better rules, stronger laws, and improved surveillance can make insider trading "much more difficult."

That's a measured take, and a reasonable one. No regulation eliminates bad actors. What it does is raise the cost of bad behavior and signal to participants that the CFTC and Congress are watching. For markets that still have serious legitimacy questions among institutional players, even partial credibility gains matter.

The open question now is whether these legislative efforts converge into a single cohesive framework, or fragment into a patchwork of competing bills that takes years to resolve. Moulton's office ban is easy — one congressman, one memo, done. Federal legislation is another matter entirely.