A Republican lawmaker has introduced legislation that would ban insider trading in prediction markets — but the prohibition would not cover White House officials. The bill also bars wagers on policy outcomes while leaving members of Congress free to place sports bets or trade in other prediction contracts.
Insider trading ban with a gap
The proposed law targets the use of non-public information to profit from prediction markets, where people bet on events like election results or policy decisions. However, the ban explicitly exempts White House staff and advisers, a carve-out that critics say could allow those closest to policy-making to trade on inside knowledge without penalty.
The lawmaker, whose name has not been disclosed in the bill text, did not explain the reasoning behind the exemption. The measure does not define what constitutes insider trading in the context of prediction markets, leaving that interpretation to future regulators.
Congress retains access for sports bets
Unlike some earlier proposals that sought to restrict all political betting, the bill does not prevent members of Congress from using prediction markets or placing sports bets. It only prohibits wagers on policy outcomes — meaning a lawmaker could still bet on a football game or a stock index, but not on whether a specific bill will pass.
That distinction sets the bill apart from broader bans that had been floated by both parties. The current version appears designed to address concerns about market manipulation while preserving other forms of gambling that lawmakers and their staffs may use.
What the bill leaves unanswered
The legislation does not specify how the ban on policy-outcome wagers would be enforced, or which agency would oversee compliance. It also leaves open the question of whether existing insider-trading laws for securities would apply to prediction markets, which are regulated differently.
White House officials are not the only ones exempted. The bill also carves out a general exception for "persons acting in an official capacity" — language broad enough to cover federal employees who obtain non-public data as part of their jobs. That has raised eyebrows among ethics watchdogs, who worry the loophole could swallow the rule.
The lawmaker introduced the bill quietly, without a press release or public statement. It now awaits referral to a House committee, though no hearing has been scheduled. The proposal's future is uncertain, especially given the divided views on prediction markets within both parties.
