PREDICT Act: U.S. Lawmakers Introduce Bipartisan Bill to Regulate Crypto Prediction Markets

U.S. Representatives Adrian Smith (R-NE) and Nikki Budzinski (D-IL) have introduced the PREDICT Act, a bipartisan bill that would ban Members of Congress, the President, and other federal officials from trading on prediction markets tied to political events. The legislation targets a growing concern over insider information being used to profit on platforms like Polymarket and Kalshi.

TLDR Keypoints

• The PREDICT Act (Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act) was introduced on March 25, 2026, by Republican Rep. Adrian Smith of Nebraska and Democrat Rep. Nikki Budzinski of Illinois.
• The bill prohibits Members of Congress, their spouses and dependent children, the President, Vice President, and political appointees from trading on prediction market outcomes tied to political events, policy decisions, and government actions.
• Penalties include a civil fine equal to 10% of the prohibited transaction's value plus full disgorgement of profits, paid directly into the U.S. Treasury.

What the PREDICT Act Proposes

The bill specifically targets insider trading on prediction markets, not the platforms themselves. Federal officials covered by the act would be barred from wagering on outcomes they could influence or have advance knowledge of, including political events, policy decisions, and government actions.

Non-political prediction markets, such as those covering sports outcomes, would remain unaffected. The distinction is significant for crypto-based platforms that offer a wide range of event contracts beyond politics.

"Serving the American people is a privilege, not a pathway to profit," Rep. Smith said in an official statement. "Our commonsense, bipartisan bill will give Americans confidence that the decisions of their elected officials are guided by merit, not personal profit."

Rep. Budzinski pointed to specific incidents that motivated the legislation. "In recent months, we've seen instances of little-known traders making massive profits on events ranging from war with Iran to how long a government shutdown will last, raising necessary questions about the use of inside information," she said.

Suspicious Trades That Triggered the Legislative Push

The bill follows a string of suspicious prediction market trades that drew public scrutiny. In late February 2026, six Polymarket accounts collectively won approximately $1.2 million by correctly predicting a U.S. strike on Iran before the event became public knowledge.

In a separate incident, a single trader on Polymarket earned $436,759 by predicting the removal of Venezuelan leader Nicolás Maduro just hours before U.S. special forces apprehended him. Both cases raised questions about whether individuals with access to classified government information were profiting on prediction platforms.

These events have spurred broader industry changes. Polymarket has partnered with Palantir and TWG AI to build trading surveillance systems, part of a wider trend of tech industry leaders reshaping platform governance. Kalshi, another major prediction market platform, has implemented preemptive screening measures to block certain individuals from politically sensitive markets.

Why This Matters for Crypto Prediction Platforms

The PREDICT Act is one of at least five Congressional bills introduced in 2026 targeting prediction market activity. Others include the BETS OFF Act, the Prediction Markets Are Gambling Act, the DEATH BETS Act, and the Prediction Markets Security and Integrity Act.

What sets the PREDICT Act apart is its narrower scope. Rather than attempting to ban or reclassify prediction markets entirely, it focuses specifically on insider trading by government officials. For platforms like Polymarket and Kalshi, this approach is arguably more favorable than competing proposals that could restrict their operations entirely.

The broader regulatory landscape affecting crypto markets has been a persistent source of uncertainty. Prediction markets built on blockchain technology sit in a particularly ambiguous space, straddling gambling regulation, financial derivatives law, and crypto oversight.

Eric Zitzewitz, an academic researcher studying prediction markets, has warned that unchecked insider trading could undermine the platforms from within. "If a platform like Polymarket allowed insider trading, the resulting reputational damage could turn off everyday bettors," he noted in an analysis published by Decrypt, adding that reduced liquidity from wary participants "could be a bigger deal in terms of reducing market accuracy."

What Comes Next for the PREDICT Act

Despite its bipartisan sponsorship, the PREDICT Act faces significant headwinds. The bill will need to clear committee referral, likely to the House Agriculture Committee or House Financial Services Committee, before any floor vote.

The Trump administration's CFTC Chair, Mike Selig, has publicly supported "lawful innovation" in prediction markets, signaling executive branch resistance to restrictive legislation. In a GOP-controlled Congress where the administration favors lighter regulation of emerging financial technology, passage is considered unlikely.

The geopolitical tensions that have roiled markets in early 2026 continue to fuel demand for prediction market contracts on political and military outcomes. That tension between growing user demand and regulatory concern is unlikely to resolve quickly.

For crypto-native prediction platforms, the key milestone to watch is whether any of the five competing bills advances to a committee hearing. A scheduled markup would signal that Congress is serious about legislating, not just posturing. Until then, the industry's self-policing efforts, including Polymarket's Palantir-powered surveillance and Kalshi's screening protocols, remain the most concrete changes affecting day-to-day operations.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.