Steil Targets Congressional Trading on Prediction Markets

The Signal

A House Administration bill from Rep. Bryan Steil would bar members of Congress, spouses, and dependent children from trading prediction markets tied to government policy, government action, or political outcomes. The proposal, introduced Thursday, would fine violators at least $2,000 plus the net gains from the trade, according to Politico, Bloomberg, and CNBC.

The bill does not ban Kalshi, Polymarket, Robinhood, or other venues from listing political contracts. It targets a class of participants with access to nonpublic legislative information, putting prediction markets into the same ethics debate that has surrounded congressional stock trading.

The proposal lands as political-event trading is becoming harder for Washington to ignore. Kalshi is reportedly discussing an IPO after its annualized revenue run rate reached $2 billion, Robinhood has reported $3.9 billion in event-contract volume, and Schwab is preparing S&P 500 event-based contracts with Cboe.

The Mechanism

• Steil’s bill treats prediction-market exposure as an insider-information risk, not only a gambling issue. That framing helps regulated platforms argue that the product can be supervised like financial trading, while still accepting restrictions on conflicted users.

• Compliance pressure would likely move from Capitol Hill into platform operations. Even if the bill directly restricts lawmakers, venues may face pressure to add certifications, restricted-person attestations, account flags, or surveillance rules for Washington-linked accounts.

• Kalshi has the most to manage onshore. As the CFTC-regulated venue most associated with U.S. political and policy contracts, Kalshi benefits from legitimacy but also becomes the easiest target for congressional ethics rules and platform-level monitoring demands.

• Polymarket faces a different version of the same problem. Offshore, crypto-native liquidity is harder for Congress to police through platform rules, but any high-profile lawmaker trade would intensify U.S. pressure around access controls, VPN use, and market integrity.

• The bill could narrow the “politics is finance” argument. Platforms want election, policy, and macro contracts treated as tradable information markets. Lawmakers are now separating public informational value from privileged participation.

• Democratic resistance may stall the House package. Rep. Joe Morelle told Semafor Democrats may hold out for a broader stock-trading ban that also covers prediction markets and potentially the executive branch.

The Landscape

Market Position: Prediction markets are moving from niche trading venues into mainstream brokerage distribution. Kalshi has stacked recent wins: Wealthsimple distribution in Canada, Trading Technologies for institutional access, a perps expansion now facing CME litigation, and reported IPO talks tied to a $2 billion annualized revenue run rate. Robinhood’s $3.9 billion in event-contract volume shows retail brokers can generate large flow without owning the core exchange infrastructure, while Schwab’s reported Cboe plan would bring another major brokerage into event-based contracts starting with S&P 500 outcomes.

Regulatory Environment: The CFTC is still the main venue-level regulator for U.S. event contracts, but Congress is now moving on participant-level restrictions. The agency’s proposed changes to Rule 40.11 would clarify when event contracts can be prohibited as contrary to public interest, including politically sensitive or socially controversial categories. State regulators continue to challenge sports-related event contracts, while federal lawmakers are beginning with political-market conflicts rather than a blanket ban on the asset class.

Key Data

• Covered persons: Members of Congress, spouses, and dependent children under Steil’s proposal.

• Covered markets: Prediction markets tied to specific government policy, government action, or political outcomes.

• Penalty: Minimum fine of $2,000 plus the trader’s net gains, according to Steil’s office.

• Kalshi scale: Reported annualized revenue run rate of roughly $2 billion, about triple the level reported in November.

• Brokerage flow: Robinhood has reported $3.9 billion in event-contract trading volume; Schwab is reportedly working with Cboe on S&P 500 event-based options.

What’s Next

The next catalyst is whether House leadership folds Steil’s language into a broader congressional trading bill or lets it stand as a narrower prediction-market ethics measure. A narrow bill would give platforms a manageable compliance template. A broader package that includes stocks, executive-branch officials, or platform obligations would turn prediction-market surveillance into a Washington-facing operating requirement, especially for CFTC-regulated venues trying to win mainstream distribution.

Predict This covers the evolution of prediction markets — platforms, regulation, volume, and methodology. For questions or tips: reply to this email.

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