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Prediction markets have spent two years arguing they are financial products, not gambling platforms. Congress is now treating them like both, and the legislative response is accelerating.
House Administration Committee Chairman Bryan Steil disclosed on June 5 that he plans to fold prediction market restrictions into H.R. 7008, the congressional stock trading ban bill that cleared committee in February but has sat idle on the House calendar ever since. The provisions would be added before the bill reaches the House floor, and House Speaker Mike Johnson has confirmed leadership intends to schedule a vote this summer.
Under H.R. 7008 as currently written, lawmakers and their families would be banned from purchasing publicly traded stocks and required to disclose an intent to sell at least seven days before completing a transaction. Violators would face fines of $2,000 or 10% of the investment’s value, whichever is greater, and would forfeit any realized gains. Steil’s amendment would extend that same enforcement architecture to prediction market contracts, covering members of Congress, their spouses, and dependents.
Contracts tied to sports or entertainment outcomes would remain permitted. Contracts tied to elections or public policy would be restricted, reflecting Steil’s view that the insider trading concern is not about prediction markets as a product category but specifically about contracts where lawmakers hold material non-public information or direct influence over the outcome being wagered on.
Steil also said he wants to extend the ban to former federal lawmakers and candidates for federal office and that he supports prediction markets being regulated within the US under American values, a comment that has direct implications for Polymarket, which currently bans US users from its main exchange while working to establish a US legal presence.
The push is not happening in a vacuum. The move follows a broader federal push against prediction markets, including the Senate’s April adoption of a rule prohibiting its members from using prediction markets and House Oversight investigations into whether lawmakers have already used inside information to trade on political outcomes.
A US soldier’s alleged trades on military activity in Venezuela drew particular attention earlier this year and gave the congressional scrutiny a national security dimension that elevated the issue beyond financial regulation.
Steil also said he expects the House Ethics Committee to issue updated guidance for members on prediction market protocols, suggesting the regulatory response will arrive on two tracks simultaneously: statutory restrictions through H.R. 7008 and softer internal House conduct rules from Ethics.
Neither platform is targeted by the legislation in the way the Federal Trade Commission (FTC) investigation letter from nine House Democrats targeted their consumer-facing practices last week. Steil was explicit that his proposal is not a critique of prediction markets as products. Both Kalshi and Polymarket already include internal restrictions on insider trading, and their executives met with the House Financial Services Committee in a Republican-only roundtable on June 4, the day before Steil’s announcement.
The more consequential long-term pressure for both platforms is the broader question of US market access. Steil said he wants prediction markets regulated in the US under American values and that consumers should be protected from external transactions, language that frames Polymarket’s offshore structure as a problem rather than a neutral jurisdictional fact.
With congressional scrutiny, an FTC investigation request, ongoing Commodity Futures Trade Commission litigation, and state-level legal battles all active simultaneously, the prediction market industry is navigating the most complex regulatory environment it has faced since sports contracts launched in 2025.
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