Amid growing scrutiny of prediction markets in the United States, lawmakers are proposing a new bill. The PREDICT Act, introduced by a bipartisan group, will prohibit top government officials, including President Donald Trump, from placing bets on political events through prediction market platforms.
PREDICT Act Targets Political Betting on Prediction Markets
The latest reports reveal that the US lawmakers have introduced a bipartisan bill, called the PREDICT Act. The lawmakers intend to use the bill to prevent top government officials from participating in political prediction market betting. The act seeks to curb the misuse of insider information for personal financial gain.
Introduced by Representatives Adrian Smith and Nikki Budzinski, the PREDICT Act highlights concerns of officials misusing sensitive information to have an unfair edge in prediction markets. It is worth noting that the move comes amid the major update in the popular CLARITY Act. As the White House and Senate have come to an agreement on the stablecoin yields proposal, April 13 emerges as a key date for the crypto bill.
Who Is Affected by the Bill?
According to the proposal, chief officials like the president, vice president, members of Congress, and political appointees, as well as their family members, will not be allowed to make political bets. Thus, the move focuses on banning trades linked to political events, policy decisions, and other government outcomes.
If passed, the law would impose strict penalties for violations. These include a 10% fine on the contract value and forfeiture of any profits. Such confiscated assets would be directed to the U.S. Treasury.
The proposal also focuses on a gap that has become more noticeable as prediction markets grow. These platforms let users trade on real-world events, including elections, crypto trends, and global developments.
Lawmakers believe that this could give insiders a financial advantage. They have access to the information that others lack. Smith pointed out that having non-public information creates an unfair playing field for everyone else.
Prediction Markets Face Growing Scrutiny in the US
The PREDICT Act introduction occurs during a period when US prediction markets face significant operational challenges. Multiple US states and lawmakers have targeted platforms like Kalshi and Polymarket, citing concerns about insider trading and regulatory violations.
Recently, the US senators introduced a bill to prohibit sports betting on prediction markets. The bill, which Democrat Adam Schiff and Republican John Curtis launched, seeks to prohibit all “casino-style games” from appearing on prediction markets. The US states have also accused these platforms of providing unregulated gambling activities.
However, the US market now sees an increase in prediction platforms despite existing difficulties. CoinGape reported that Nasdaq has submitted an SEC filing to launch options contracts on prediction markets.
In addition, many crypto exchanges like Coinbase have also launched their own prediction markets. This indicates that the space continues to grow despite growing challenges.
