More than 30 Democrats in the U.S. House, including former Speaker Nancy Pelosi, are backing new legislation that would restrict how government officials interact with prediction markets.
The push comes after a controversial bet on Polymarket that began at $32,000 and ballooned to over $400,000 shortly before the unexpected detention of Venezuelan President Nicolás Maduro. The timing raised eyebrows on Capitol Hill, especially after U.S. officials later confirmed that Maduro and his wife, Cilia Flores, were arrested in an overnight raid coordinated by the Trump administration.
The wager paid out at the maximum level, delivering returns of more than 1,200%, sparking concerns among lawmakers and analysts that the trade may have been based on material nonpublic information.
The bill, introduced by New York Representative Ritchie Torres, is called the Public Integrity in Financial Prediction Markets Act of 2026. Torres said the episode exposed a serious loophole in federal law, particularly as prediction markets grow in size and begin to touch sensitive political and national security decisions.
According to Torres, a newly created Polymarket account placed a large bet on Maduro being ousted by January 2026, despite market odds suggesting the outcome was extremely unlikely at the time.
Under the proposed legislation, federally elected officials, political appointees, executive branch employees, and congressional staff would be prohibited from buying or trading prediction market contracts tied to government actions, policies, or political outcomes. While the bill does not create new penalties, it would clearly apply existing insider trading rules to prediction markets, which currently operate in a patchwork regulatory environment.
Torres said allowing officials to profit from outcomes they may influence poses a clear public integrity risk. Legal scholars and economists have echoed those concerns, warning that insider trading undermines trust in markets and weakens the value of prediction markets as forecasting tools.
The bill is co-sponsored by a broad group of House Democrats, including Pelosi, Rashida Tlaib, Brad Sherman, Seth Moulton, and other senior lawmakers. Supporters say it builds on the STOCK Act, which governs insider trading by members of Congress, while updating those protections for newer financial instruments.
The legislation arrives as prediction markets continue to expand rapidly. In 2025 alone, trading volume across major platforms topped $44 billion, with weekly volumes exceeding $5 billion in early January 2026. Political events, elections, and geopolitical flashpoints have become some of the most actively traded contracts.
At the same time, federal policy toward prediction markets has shifted. Courts ruled in 2024 that the Commodity Futures Trading Commission overstepped its authority by blocking election-related contracts, a decision later upheld on appeal. After years of enforcement actions that pushed platforms out of the U.S., regulators have taken a more permissive stance, issuing no-action letters for certain event contracts in late 2025.
