Washington’s taking another swing at prediction markets, and this time they’ve got both parties on board. Representatives Adrian Smith and Nikki Budzinski have tabled fresh legislation that would stop members of Congress and senior officials from placing bets on political outcomes and government decisions.

The PREDICT Act, introduced late last month, arrives as lawmakers scramble to get a handle on the booming prediction market sector. It’s a proper crackdown too, covering not just senators and representatives but their families, staff, and top brass across government departments.

What the Bill Actually Does

The legislation takes dead aim at a practice that’s raised eyebrows across the political spectrum. Under the proposed rules, covered individuals couldn’t trade on any platform where contracts are tied to political events or government action. That means no punts on election results, policy decisions, or geopolitical developments if you’re on the government payroll.

Smith reckons the bill will restore public trust in elected officials. “Serving the American people is a privilege, not a pathway to profit,” he said when announcing the measure. Hard to argue with that, particularly after some rather questionable trades hit the headlines.

Budzinski pointed to recent instances where unknown traders banked massive wins on events ranging from military strikes to government shutdowns. Those eye-watering profits naturally sparked questions about whether someone with inside knowledge was playing the game.

Real Consequences This Time

What sets this proposal apart is the enforcement mechanism. Violators would face fines equal to 10% of the prohibited trade’s value and would have to cough up any profits to the Treasury. The bill also mandates public disclosure of violations. That ought to concentrate minds somewhat.

The scope is comprehensive. We’re talking Congress members and their immediate families, the President and Vice President, political appointees, senior executive branch officials, and members of the judiciary. Congressional staff get caught in the net too, which makes sense given their access to sensitive information.

Will It Actually Work?

Here’s where it gets interesting. The STOCK Act, passed over a decade ago to prevent congressional insider trading on stock markets, hasn’t resulted in a single prosecution. That track record doesn’t exactly inspire confidence that this new legislation will fare any better.

The PREDICT Act joins a growing pile of federal proposals targeting the prediction market industry. Several other bills are currently working their way through Congress, each taking a different approach to regulation. With so many competing measures in play, it’s anyone’s guess which one, if any, actually makes it across the finish line.

Industry Under Scrutiny

Platforms like Polymarket and Kalshi have found themselves under intense scrutiny following high-profile trades that seemed to anticipate major events. The joint US and Israeli strikes on Iran and the capture of Venezuela’s former president both saw suspicious trading activity beforehand.

For an industry that’s experienced explosive growth, particularly around election cycles, this level of legislative attention was probably inevitable. The question now is whether Washington can craft sensible rules that address legitimate concerns without strangling a market that’s proven genuinely useful for gauging public sentiment and future probabilities.

The bipartisan nature of the PREDICT Act gives it better odds than some of the other proposals floating around Capitol Hill. Whether that translates into actual legislation remains to be seen. But prediction markets are clearly on the regulatory agenda for the foreseeable future.