A House committee advanced a bill Wednesday that would bar all members of Congress from trading certain prediction market contracts, marking the first time one of the more than 20 prediction market-related bills introduced this year has received public committee debate and moved forward.

The House Administration Committee voted 5-4 to report the Stop Lawmakers From Predicting Act favorably to the House after a brief but substantive debate over whether the proposal goes far enough. The bill, introduced on June 18, would prohibit members of Congress and their spouses and dependent children from trading certain contracts related to politics and government actions. 

“Members of Congress should be writing public policy, not wagering on its outcome,” said Rep. Bryan Steil (R-Wis.), the committee chairman and bill sponsor.

Steil said the bill is designed to address growing concerns that lawmakers could profit from markets tied to decisions they help make, while avoiding a broader ban on unrelated prediction market trading.

Democrats did not defend congressional participation in prediction markets, but opposed the bill as too narrow. Rep. Joe Morelle (D-N.Y.), the committee’s ranking member, argued the House should instead follow the Senate, which unanimously adopted an internal rule in late April banning senators and staff from trading any prediction market contracts.

“The behavior is too pernicious for a half measure,” Morelle said.

The Stop Lawmakers From Predicting Act (HR 9367) would apply to members of Congress and immediate family members, restricting them from trading certain prediction market contracts tied to government policy, government action, political outcomes or information learned through congressional service.

Steil said the bill clarifies that lawmakers cannot use prediction markets to profit from their decisions or the information they receive in office.

“Under current law, lawmakers are not explicitly prohibited from using prediction markets,” Steil said. “There’s growing concerns that lawmakers could wager on the outcomes of decisions they make.”

The bill includes penalties of $2,000 or 10% of the covered transaction, whichever is greater, along with forfeiture of any net gain from the transaction. 

“This legislation will clarify that no member of Congress can wager on insider information they may gain through their service,” Steil said. “In January, this committee advanced the nonpartisan Stop Insider Trading Act, which prevents members of Congress from purchasing individual stocks. So now we have an opportunity to build on that important legislation and take this next step.”

Morelle said Democrats supported the goal of preventing lawmakers from trading prediction markets, but argued Steil’s bill is narrower than action the Senate already took for its members. 

“I support the policy goal of HR 9367 — just as I do not buy or sell stock, don’t hold individual stock, I do not participate in prediction markets,” Morelle said. “And that should be the norm for the entirety of the federal government.”

Morelle argued Congress should move immediately to prohibit lawmakers and staff from all prediction market trading rather than advancing a narrower federal bill that would take effect 180 days after enactment. Earlier this year, the Senate unanimously adopted an internal rule barring senators, officers and staff from trading any event contracts on prediction markets. The rule took effect immediately.

“The Senate did it in a matter of minutes,” Morelle said of the rule adoption. “No six-month grace period, no procedurally laborious process. They just went to the floor with a two-page resolution, and banned it all, unanimously. We should do the same.”

Morelle offered an amendment that would have replaced Steil’s narrower bill with a broader and immediate ban on congressional participation in any prediction markets. 

Steil opposed Morelle’s amendment, arguing the broader ban could unintentionally sweep in unrelated sports prediction markets traded by family members with no connection to congressional work.

“Say an individual has a son or daughter who’s 18, goes to college,” Steil said. “They get excited during the NCAA tournament. They turn on their phone, and they make an otherwise legal bet, or a prediction … Under my colleague’s amendment, with a broad brush, their dependent child away at college would trigger a federal violation of the underlying member.”

Steil said he was not seeking to resolve the larger debate over online gambling or sports event contracts through the bill.

“Whether or not individuals should be engaged in prediction markets or online gambling, that is a contentious debate across the country, and I’m not looking to enter into that,” Steil said. “At least not today.”

Morelle’s amendment failed 5-4, with Republicans voting no and Democrats voting yes. The panel reported the underlying bill favorably by the same margin.

The debate also touched on whether prediction market platforms already restrict some political trading. Steil said many platforms already prohibit members from trading certain political contracts through their own rules, but argued Congress should still make that restriction explicit in law.

“Many of these platforms, when you go on, actually, if you read the rules and regulations … those platforms are actually outlawing that, or ‘banning it’ maybe would be a better word, in the terms and conditions of these platforms,” Steil said.

Kalshi CEO Tarek Mansour made a similar point in a CNBC interview Wednesday morning. Mansour said Kalshi already restricts members of Congress and congressional staff from trading certain markets on the platform.

“We’re actually regulating ourselves beyond what’s currently required from us,” Mansour said. “If you’re a member of Congress today, or a staffer, you can’t trade on Kalshi anything that may involve things that you have material, nonpublic information on.” 

Mansour said Kalshi uses identity verification and market surveillance to flag suspicious trading. The exchange has also previously announced enforcement actions against state-level lawmakers and political candidates who violated its rules.

Having cleared the House Administration Committee, HR 9367 is now eligible for further consideration in the House, though its next steps and timeline are uncertain at the moment.

The markup is still a notable step for prediction market legislation. Prediction markets have already surfaced in congressional hearings, oversight inquiries, and the Senate’s internal trading ban, but none of the more than 20 related bills introduced in Congress this year has advanced as far as Wednesday’s committee vote on the Stop Lawmakers From Predicting Act.

HR 9367 could face a difficult path in the Senate, where members have already adopted a similar but broader internal rule. Morelle argued that could make the House bill a tough sell across the Capitol.

“The Senate is certainly not going to pass a bill that is a weaker version of what they already have done by rule,” Morelle said.

The markup showed bipartisan agreement on the general idea that lawmakers should not profit from prediction markets tied to their official work. But it also exposed a split over whether Congress should adopt a narrow ban focused on political and government-related contracts or a broader prohibition on all prediction market trading by lawmakers and staff.

The post House Panel Advances Congress Prediction Market Ban, First Of 20+ Bills To Move Forward appeared first on DeFi Rate.

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