Policing the Odds: Congress Confronts Widespread Insider Trading in Prediction Markets

Prediction markets—like Kalshi and Polymarket—have surged in popularity in recent years. Prediction markets are exchange-based platforms where participants can buy and sell contracts based on the outcome of future events.  These contracts allow customers to wager on basically anything, from political elections and sports outcomes to weather patterns and even pre-determined events such as the outcome of a pre-taped TV show.

Because of what prediction markets allow their customers to wager on, they are highly susceptible to abuse, particularly through insider trading.  For example, as CBS News  reported anonymous traders believed to have insider knowledge, secured payouts exceeding $400,000 on contracts suspiciously predicting the ouster of Venezuelan leader Nicolás Maduro right before it occurred. Similarly, in January 2026, Kalshi barred an employee associated with the MrBeast YouTube channel from its platform for wagering on future video topics based on his insider knowledge of production schedules. Indeed, according to a Harvard Law School Forum on Corporate Governance paper, $143 million had been earned on Polymarket alone from February 2024 through February 2026 using insider information.

Given the widespread occurrence of these incidents across prediction markets, significant legislation addressing insider trading in prediction markets has been introduced in the 119th Congress: The Stop Trading on Predictions and Corrupt Bets (STOP Corrupt Bets) Act of 2026 (S. 4226 and H.R. 8123). This law would prohibit CFTC-registered entities (i.e.: prediction markets) from listing event contracts involving: (1) political elections or contests; (2) actions taken by the executive, legislative, or judicial branch of the U.S. government (subject to an exception for contracts that the CFTC determines are used for hedging or mitigating commercial risk); (3) sporting events or contests; or (4) any military action taken by the United States or a foreign country.

If passed, this bill will significantly limit the availability of prediction markets and dramatically transform what kinds of event-based contracts people can wager on.