On March 25, 2026, U.S. Congressman Adrian Smith (Republican) and Nikki Budzinski (Democrat) jointly introduced a new bill — the PREDICT Act, titled “Preventing Real-Time Exploitation and Deceptive Insider Congressional Trading Act.” This bill elevates the previously somewhat niche tool—prediction markets—into the core focus of political maneuvering in Washington. The main thrust of the bill is clear: it sets a prohibitive line for participation in prediction markets by the President, Vice President, members of Congress, senior officials, and their family members. Crossing this line will result in a combination penalty of a 10% fine of the contract value and the forfeiture of all related profits. The issue it aims to address is increasingly sensitive: when those who possess key political and security information place bets in probability markets on government shutdowns, wars, and election outcomes, can the boundary between “price discovery” and “public service” still be considered fair? On paper, this is merely another compliance document to prevent the misuse of insider information; however, in the real context, it resembles a digital-age “Congressional Gambling Ban” announcement—only this time the betting table has shifted from Wall Street to the servers of prediction market platforms.

Bipartisan Collaboration: Prediction Markets as New Interfaces of Power and Stakes

From a positional perspective, Adrian Smith represents the Republican Party, while Nikki Budzinski comes from the Democratic Party. Their collaboration in the House to push a restrictive bill directly affecting themselves and top executives is unusual. Amid the current high polarization on most issues, their tactical alliance on the prediction market issue indicates that a latent judgment has formed: without setting clear rule boundaries early, prediction markets could quickly evolve into amplifiers of political risk, rather than just simple tools of “crowd wisdom”.

For a long time, prediction markets were primarily viewed as small experiments within academia and finance, with limited contract sizes and niche topics. However, as contracts related to highly sensitive events such as the Iran War and U.S. government shutdown surfaced on platforms like Kalshi and Polymarket, Washington began to realize this is no longer just an academic sandbox but a “political betting arena” deeply coupled with actual policy, great power competition, and national security. When these betting arenas synchronize closely with real decision timelines, even being packaged as a “more intuitive public opinion and probability indicator,” their feedback effects on policy formulation and public sentiment far exceed those of traditional financial derivatives.

The public unease is fermenting in this context: if a senior official or member of Congress with access to confidential briefs can quietly bet on contracts related to “Will the government shut down?” or “Will a conflict break out in a specific area at a particular time?”, then is the market price truly reflecting collective expectations, or is it being pre-emptively “spoiled” by a few insiders with cash? This imaginative space, combined with real-world controversies around sensitive contracts, quickly reconstitutes prediction markets from a technical and financial product experiment into a scene of moral and trust crisis regarding “officials betting on political events,” thus paving the way for the PREDICT Act’s emergence in terms of public discourse and political context.

From the STOCK Act to PREDICT: Digital Transition of Insider Trading

Going back in time to 2012, the U.S. Congress passed the STOCK Act, which primarily aimed to restrict members of Congress and their staff from profiting in the stock market and other traditional securities markets using non-public information, responding to long-standing criticisms regarding “lawmakers trading stocks and insider trading.” That round of regulatory reform targeted the secondary stock market, establishing the principle that “insider trading of stocks cannot be facilitated by legislation and regulation” but did not touch upon the then-still-marginal arena of prediction markets and probability contracts.

Over a decade later, the PREDICT Act shifts its focus from publicly listed company securities to prediction contracts and probability markets linked to events. Essentially, this marks a new type of “betting venue”: participants are no longer betting on long and short prices but on “whether events will happen,” “when they will happen,” and “in what manner they will occur.” For officials holding key political and security information, the shift from stocks to event contracts merely changes the channel for information arbitrage from asset prices to probability curves.

In the digital age, the forms of insider trading are migrating: the traditional model involved positioning based on information like company earnings reports, merger plans, regulatory decisions, etc., in stocks and bonds. Today, contracts around macro events such as wars, sanctions, government shutdowns, and election outcomes are emerging incessantly, allowing informational advantages to turn into profits in more “pure” event betting markets. What PREDICT aims to address is this gray area shifting from the securities market to contracts and probability markets—not simply replicating the STOCK Act but adding a dedicated firewall beyond the existing framework to block the space for “betting on real events using public office insider information” as much as possible.

Who Cannot Bet: Family Circle Restrictions from the White House to Capitol Hill

The PREDICT Act delineates its applicable scope quite directly: the President, Vice President, members of Congress, and federal senior officials, along with their spouses and dependents, are all included in the prohibition list for participating in prediction markets. This not only covers the power centers of both the White House and Capitol Hill but also encompasses many senior administrative officials who possess detailed knowledge of policy execution and intelligence.

Incorporating the “family circle” into regulatory logic is a consistent approach when Washington deals with conflicts of interest. In the stock domain, circumventing personal accounts through spousal and children's accounts has long been a path closely monitored by public opinion and compliance departments. Applied to the prediction market scenario, legislators evidently do not want to see a high-ranking official publicly professing “I have never participated,” while their spouse or registered dependents are boldly accumulating positions in events highly relevant to their authority. Including the entire family in the restrictions attempts to close off the loophole of “relative proxy betting.”

The real contest will revolve around “how to define senior officials” and potential exemptions. Currently available information does not fully disclose the precise definition of “senior staff” in the bill, and the extent of its coverage remains unclear; it is also unknown whether there will be exceptions for specific positions, agencies, or independent entities. Once these details enter the concrete legislative battleground, they will directly determine how many individuals are forced out of the prediction market and how many can continue to navigate the gray area through ambiguous identities or position delineations.

In the larger institutional structure, the choice of this scope will also exert a deterrent effect on Washington's common “revolving door” and lobbying ecology. The flow between officials and think tanks, consulting firms, and lobbying agencies already causes information and influence to exchange frequently in semi-public arenas; if prediction markets become arbitrage tools for these flow nodes, regulatory pressures will inevitably spill over into a broader political and policy influence industry chain. By including family circles and senior officials in the list, PREDICT essentially sends a signal to the entire ecosystem surrounding power in Washington: prediction markets are no longer a new toy for this circle to casually experiment with.

10% Fine Plus Total Forfeiture: The Red Line Washington Draws for Prediction Markets

In terms of penalty design, the PREDICT Act adopts a two-part approach: imposing a fine of 10% of the value of the violating contract, while also forfeiting all related profits. The 10% figure may not seem excessive at first glance, but combined with the clause of “forfeiting all profits,” it means that once deemed in violation, the profit potential in prediction markets is nearly obliterated, and there is an additional cost related to the size of one’s position. This renders even the temptation of “earning just a little” hard to offset against the potential costs.

Compared to the traditional securities sector, where insider trading often involves multiplied fines and criminal charges as heavier penalties, this scheme opts for a middle ground between symbolic meaning and substantive effect. On one hand, it conveys a stance through clear proportions and profit zeroing: prediction contracts are not a legal vacuum; one cannot evade rigid constraints on official conduct simply because they are nominally “markets of information and probabilities”; on the other hand, the current disclosed information does not suggest an immediate avenue rising to criminal liability, but rather employs economic penalties and public opinion costs to deter such behavior, letting officials understand that “it is not worth it for this money.”

For platforms like Kalshi and Polymarket, if these rules take effect, the most immediate structural change will stem from the potential exit of “official funds” and funds closely coupled with power. Even though this portion of funds may not dominate overall liquidity, their exit will alter the composition structure of the markets—those more familiar with decision rhythms and deeper information will be forced out, making the price formation in the market increasingly reliant on ordinary traders, institutional speculators, and algorithmic funds. Some voices within the industry worry that this may weaken the information integration capacity of prediction markets as “close to real power operations”; others hope that such filtering will help clear the sources of conflicts of interest, enabling platforms to negotiate compliance with greater confidence, branding themselves as “clean public expectation mechanisms,” in exchange for greater tolerance and institutional space from regulators.

Platform Games Under Regulatory Shadows: From Sensitive Contracts to Geographic Strategies

The PREDICT Act did not emerge out of thin air; it builds upon regulatory scrutiny and public controversies encountered by platforms like Kalshi and Polymarket in recent times. Based on disclosed information, contracts concerning highly sensitive events such as the Iran War and U.S. government shutdown have already prompted regulatory agencies and media to question “whether real crises are being utilized as speculative tools,” bringing the design boundaries and approval processes of platform contracts under a microscope.

The ripple effect of these events has significantly heightened public sensitivity surrounding “official participation in political event betting.” Contracts that were originally merely for hedging risk or expressing viewpoints are now being re-examined as potential leak interfaces interlinked with policy information, diplomatic secrets, and military action expectations; once participants holding key positions are added, market prices cease to be just “cold probabilities” and instead become interpreted as “the shadow of insider intelligence on the betting platforms.” In this atmosphere, Congress pushing a restriction bill specifically targeting officials and prediction markets constitutes both a political risk management strategy and an institutional response to earlier regulatory controversies.

Earlier, the Democratic camp had already proposed several related bills, including BETS OFF, attempting to tighten permissions and scopes for political event contracts from different dimensions. These trajectories cumulatively form a clear curve of tightening regulation: from case-by-case scrutiny to platform discussions, then to abstract principle legislation until participants from specific groups are explicitly included in prohibition clauses. PREDICT is merely the latest link in this curve, and for the first time, it distinctly binds “official identities” to “the right to participate in prediction markets.”

Faced with this pressure, the platform-side response strategies can no longer remain at the PR level. More realistic choices include: actively blocking U.S. officials and related family accounts within compliance frameworks, imposing restrictions on sensitive groups through identity verification and transaction monitoring; shrinking contracts linked to wars, government operation, and specific country political processes while emphasizing economic data, sports events, or more “neutral” themes; and further segmenting user groups in regional strategies, ramping up KYC and geographic restrictions aimed at U.S. regulatory risks while shifting products with greater flexibility to operate in other jurisdictions. The game between platforms and regulators will shift from “whether certain types of contracts can be done” to “who is qualified to participate in these contracts and where.”

Congressional Chips in the Digital Age: Boundaries and Future of Prediction Markets

A fundamental consensus reflected in the PREDICT Act is that prediction markets in the U.S. political context are being viewed as a “political power field” requiring special constraints, rather than merely traditional financial or informational tools. For legislators, what converges here is not merely speculative capital but the potential power mapping that could inversely influence actual decisions and public trust through prices, liquidity, and market structures; therefore, it is essential to draw exclusive boundaries around certain participants—especially those wielding public power and access to confidential information.

Moving forward, as this bill advances within Congress, it will still face multiple resistances and variables. On one hand, how effectively it integrates with the existing financial, securities, and derivatives regulatory frameworks will determine whether it becomes a “symbolic gesture bill” or a genuinely implementable compliance tool; on the other hand, the parameters for defining “senior officials,” enforcement agencies, and law enforcement scales will also be continuously negotiated and revised within the interests game. The divisions and coordination among different regulatory agencies—whether traditional financial regulators or those focusing more on commodities and derivatives—will influence the ultimate enforceability.

For the broader realm of cryptocurrency and on-chain prediction markets, PREDICT raises a pressing forward-looking question: as on-chain contracts bring higher transparency and combinability to prediction markets, how will regulatory boundaries be drawn and innovation spaces preserved? On one hand, on-chain records provide unprecedented traceability for compliance investigations, theoretically assisting in identifying sensitive identities and anomalous transactions; on the other hand, permissionless protocols and cross-border flows make simple “bans on participation” challenging to fully block pathways to actual involvement, forcing regulatory thinking to shift from point-based blockages to more systemic identity management and risk markings.

The real question remains: when officials and their family funds are institutionally driven out of prediction markets, will this market be able to regain the trust of regulators and the public? If the pricing mechanism is no longer doubted to be influenced by a few insiders, the prediction markets might be viewed as “integrators of social expectations,” thus gaining a certain legitimacy in policy evaluation and risk management; however, there is also the possibility that—with the complete departure of power and insider influence—prediction markets could be reclassified as ordinary speculative platforms, fundamentally weakening their narrative label as “close to real power operations.” For all participants, the next round of discussions surrounding prediction markets is no longer just about “whether one can bet on a certain event,” but about reshaping the institutional identity of a new asset class.

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