US Representative Ritchie Torres is preparing legislation aimed at restricting insider trading on political prediction markets following scrutiny over a profitable wager linked to Venezuelan President Nicolás Maduro.
The proposal follows reports that a single prediction market trade generated more than $400,000 after betting on Maduro’s reported capture.
Torres is expected to introduce the Public Integrity in Financial Prediction Markets Act of 2026, according to people familiar with the plan.
The bill would bar federal elected officials, political appointees and executive branch employees from trading prediction market contracts tied to government policy or political outcomes when they possess nonpublic information.
The proposed restrictions would apply to buying, selling or exchanging contracts on prediction market platforms operating in interstate commerce.
The legislation is designed to align prediction markets with existing insider trading standards used in traditional financial markets.
In a post on X, Punchbowl News founder Jake Sherman outlined the scope of the proposed restrictions and their intended enforcement.
The restriction applies to buying, selling, or exchanging prediction market contracts tied to government policy, government action, or political outcomes on platforms engaged in interstate commerce.
Sherman said.
The legislative push gained momentum after a newly created Polymarket account placed roughly $32,000 on a contract predicting Maduro’s removal from power by January 31, 2026.
Hours later, US forces reportedly captured Maduro, sending the contract to settlement and generating a profit exceeding $400,000.
The account showed minimal prior activity, with the Maduro trade accounting for the majority of its recorded gains.
The timing and scale of the trade prompted concerns that sensitive political or military information may have been misused.
Analysts noted that prediction markets are increasingly intersecting with real-world political events, raising regulatory questions.
Torres’ proposal reflects growing concern in Washington about transparency and ethics in emerging financial products.
In response to the public discussion, rival prediction market platform Kalshi reiterated its internal trading restrictions.
Kalshi said its rules prohibit insiders or decision-makers from trading on material nonpublic information related to market outcomes.
Separately, Polymarket has faced renewed scrutiny following reports of account breaches affecting several users.
Multiple users reported that their balances were drained after a series of suspicious login attempts.
Affected users said positions were closed without authorisation and funds were reduced to near zero.
Polymarket attributed the issue to a vulnerability introduced by a third-party authentication provider.
The company said it has identified and fixed the security flaw and confirmed it affected only a small number of accounts.
Polymarket added that there is no ongoing risk and that impacted users will be contacted directly.
The combination of security concerns and insider trading allegations has intensified calls for clearer oversight of prediction markets.