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Republican Rep. Adrian Smith of Nebraska and Democratic Rep. Nikki Budzinski of Illinois introduced bipartisan legislation on March 25, 2026 that would prohibit federal officials from trading on prediction market contracts tied to political events, policy decisions, and government actions. The bill, designated H.R.7004 in the 119th Congress and formally titled the Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act (PREDICT Act), covers members of Congress and their spouses and dependent children, the President and Vice President, and senior executive branch appointees.

Violations would carry a civil penalty equal to 10 percent of the transaction's value, plus full disgorgement of any profits to the U.S. Treasury.

"Serving the American people is a privilege, not a pathway to profit," Smith said in a statement accompanying the bill. Budzinski framed the legislation as a response to eroding public trust: "The American people are tired of politicians using their influence for personal gain."

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What Triggered the Push

The PREDICT Act grew directly from a pattern of suspicious trading that drew sustained congressional attention. A series of trades on Polymarket and Kalshi in late 2025 and early 2026 raised the possibility that people with advance knowledge of government actions were profiting from politically sensitive contracts.

The most prominent case involved a trader who placed roughly $30,000 on Venezuelan President Nicolás Maduro's removal from power hours before a Trump administration operation to capture him. The position returned approximately $400,000, a return of around 13 times the initial stake. Rep. Ritchie Torres of New York cited that trade when he introduced a separate but related bill in January 2026, the Public Integrity in Financial Prediction Markets Act. Earlier suspicious activity around contracts tied to Iran's Supreme Leader Khamenei reportedly generated millions in profits for traders ahead of a U.S. military action.

The PREDICT Act is now one of at least six bills introduced in Congress since January 2026 targeting prediction market conduct. The bills vary considerably in sponsor, scope, and ambition:

• PREDICT Act (Rep. Adrian Smith and Rep. Nikki Budzinski): Prohibits covered federal officials from trading on politically sensitive prediction market contracts; restricts who can trade, not which contracts can exist.
• Public Integrity in Financial Prediction Markets Act (Rep. Ritchie Torres): Targets conflict-of-interest trading by officials with advance knowledge of government actions.
• Prediction Markets Are Gambling Act: Would broadly classify prediction markets as gambling and subject them to corresponding restrictions.
• STOP Corrupt Bets Act: Targets corruption-related trading on prediction platforms.
• DEATH BETS Act: Proposes banning contracts covering assassination and the deaths of public figures.
• BETS OFF Act: Would prohibit contracts covering elections, military events, sports outcomes, and terrorism.

The PREDICT Act is notable for its limited scope: it restricts who can trade, not which contracts can exist.

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Market Scale Adds Urgency

The legislative attention comes as prediction market activity has grown substantially. Polymarket recorded a single-day trading volume of $425 million on February 28, 2026, its all-time high. Combined monthly notional trading across Polymarket and Kalshi now exceeds $18 billion, with Kalshi reporting approximately $10.4 billion and Polymarket approximately $7.9 billion. Polymarket's weekly active trading addresses have surpassed 10,000, and all trade flow is publicly verifiable on-chain via Dune Analytics dashboards, since the platform settles in USDC on the Polygon network.

Polymarket re-entered the U.S. market in mid-2025, ending a nearly three-year hiatus that followed an earlier regulatory exit, after obtaining Commodity Futures Trading Commission (CFTC) designation as an approved Designated Contract Market. That approval followed its $112 million acquisition of QCEX, a CFTC-licensed derivatives exchange. The platform now operates a regulated U.S. exchange alongside its global decentralized finance (DeFi) platform. Robinhood, DraftKings, and Coinbase have also entered the prediction market space.

Both Kalshi and Polymarket have moved to pre-empt further legislation. Kalshi barred political candidates from trading on their own campaigns and blocked athletes from sports-related contracts. Polymarket published enhanced market integrity rules on March 20, 2026, prohibiting trades by anyone possessing confidential information or capable of influencing outcomes. "Our rule enhancements make our expectations abundantly clear for every participant," the company's chief legal officer said.

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Regional Implications: India and Africa

For users outside the United States, the PREDICT Act's narrow focus is largely irrelevant in practical terms, but the broader legislative wave it belongs to carries real consequences.

India is the clearest cautionary example. The Enforcement Directorate raided Probo offices in July 2025 under the Prevention of Money Laundering Act, a full month before the Promotion and Regulation of Online Gaming Act received presidential assent on August 22, 2025. That act effectively classified opinion trading as chance-based gambling, and Probo, the country's largest opinion trading platform, subsequently shut down real-money operations. Policy analysts at Delhi's Esya Centre have described the regulatory situation for prediction markets in India as a "quagmire," given unresolved questions about whether such platforms qualify as skill-based games or gambling under the Indian Contract Act specifically.

In Africa, the picture is more dynamic but similarly uncertain. Sub-Saharan Africa recorded stablecoin growth of over 180 percent year-over-year according to the 2026 Global Crypto Adoption Index, a figure that helps explain why the region has become fertile ground for prediction market participation and why regulatory developments there matter to the global industry. Luno launched prediction markets in Nigeria and South Africa on March 19, 2026, through a partnership with U.S.-based Limitless. Users can bet on price outcomes for BTC, ETH, SOL, DOGE, and XRP using USDC in 24-hour windows. The Lagos State Lotteries and Gaming Authority flagged a rival prediction platform as an illegal gaming operator in 2025, a signal that the state-level regulator is watching the sector closely.

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Passage Prospects and What to Watch

The PREDICT Act faces a difficult path. CFTC Chair Mike Selig, appointed by the Trump administration, has publicly supported lawful innovation in prediction markets, and Republican leadership controls Congress. Vanderbilt Law professor Yesha Yadav and UCLA's Andrew Verstein have noted that existing CFTC authority may already cover some of the insider trading concerns the bill addresses. Yadav has identified the central challenge as "ensuring that these markets are viewed as safe and capable of protecting participants from predatory traders," while Verstein has argued that "emergent behaviour on these platforms" requires legal frameworks to keep pace with rapid market growth.

Observers assess the narrower PREDICT Act as more politically viable than the broader proposals circulating in Congress, given its limited scope and bipartisan backing, though that reading reflects current congressional dynamics rather than any settled analysis. Bills seeking to ban entire categories of contracts, including the Prediction Markets Are Gambling Act and the STOP Corrupt Bets Act, represent a more substantial potential threat to the industry globally, in the view of those tracking the legislative landscape.

If either of those measures advances, stablecoin issuers such as Circle (USDC) and Tether (USDT) would likely face pressure to restrict on-chain settlement to regulated prediction markets only. Decentralized prediction protocols have no central operator capable of enforcing a ban, which is precisely why the enforcement pressure would fall on the stablecoin layer rather than on the protocols themselves. That dynamic would affect legacy platforms such as Gnosis and Augur (REP) as well as newer deployments on networks like Arbitrum and Base, potentially fragmenting liquidity for users in markets where centralized enforcement has no reach.