Representative Ritchie Torres plans to introduce legislation that would bar government officials and employees from trading prediction contracts linked to policy or political outcomes when they possess nonpublic information. While no evidence has confirmed insider involvement, the timing of the trade intensified calls to apply traditional market integrity standards to prediction platforms.
Congress Targets Insider Trading
US lawmakers are moving to tighten oversight of political prediction markets after a controversial trade tied to the reported capture of Venezuelan President Nicolás Maduro raised fresh concerns about insider trading. US Representative Ritchie Torres is preparing legislation that will restrict how government insiders participate in these markets.
According to reporting from Punchbowl News, Torres plans to introduce the Public Integrity in Financial Prediction Markets Act of 2026. The bill will prohibit federal elected officials, political appointees, and executive branch employees from buying, selling, or exchanging prediction market contracts linked to government policy, government actions, or political outcomes when they possess nonpublic information obtained through their official duties. Punchbowl founder Jake Sherman said the proposal is designed to close a regulatory gap that has allowed prediction markets to grow faster than the rules governing them.
The legislative push follows intense scrutiny surrounding a highly profitable wager that was placed on Polymarket. A newly created account reportedly placed roughly $32,000 on a contract predicting Maduro’s removal from power by Jan. 31, 2026.
Just hours later, US forces reportedly captured the Venezuelan leader, sending the contract to settlement and generating profits of more than $400,000 for the trader. The account showed little prior activity, with the Maduro-related trade accounting for the majority of its gains. This fueled speculation about whether sensitive political or military information may have been exploited.
While no evidence has been publicly presented linking the trade to government insiders, the timing and scale of the profits intensified calls for clearer rules. Supporters of Torres’ proposal argue that prediction markets should be held to integrity standards similar to those applied to equities, commodities, and derivatives markets.
So far, people in the industry have been quick to respond. Rival prediction market Kalshi said its internal rules already prohibit insiders or decision-makers from trading on material nonpublic information.
Polymarket itself has faced scrutiny over the past few days due to unrelated security concerns. Several users claimed their accounts were breached after suspicious login attempts, which resulted in drained balances and closed positions. Polymarket said it identified and fixed a vulnerability introduced by a third-party authentication provider.
Taken together, the insider trading debate and recent security incidents are accelerating discussions in Washington about how prediction markets should be governed.
Source: https://coinpaper.com/13526/prediction-markets-face-scrutiny-after-profitable-maduro-wager
