Lawmakers Introduce Bill to Bar Officials from Trading on Political Prediction Markets

Congressional representatives Nikki Budzinski and Adrian Smith introduced bipartisan legislation to prevent government officials from trading on political prediction markets.

The "Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act" would amend USC Title 5 ("Government Organization and Employees") to prohibit "covered individuals" from entering into any agreement, contract, or transaction that is "dependent on the occurrence, nonoccurrence, or the extent of the occurrence of a specific political event." The legislation defines "covered individuals" broadly to include Members of Congress, their spouses and dependent children, the President, the Vice President, political appointees, and high-level executive and judicial branch employees, as well as certain other federal personnel above specified pay grades.

The legislation establishes a strict ethical boundary for officials during their "Federal service" by barring transactions involving prediction markets, regardless of whether insider information is used. This scope includes not only the officials themselves but also any "individual or entity with fiduciary duties" authorized to trade on their behalf. To ensure clarity in enforcement, the bill directs supervising ethics offices to issue "interpretive guidance" on relevant terms.

The bill further outlines a robust enforcement framework and transparency requirements. If a covered individual violates the prohibition, they must "disgorge the profits" to the Treasury and pay a fee equal to "ten percent of the value of the agreement, contract, or transaction." The legislation explicitly prohibits these penalties from being paid using campaign funds or official congressional allowances. Finally, the act requires supervising ethics offices to publish a description of each fine and the "reason why each such fine was assessed" on a publicly available website.