US lawmaker moves to curb prediction market trading abuses

US Representative Ritchie Torres said he plans to introduce legislation targeting potential insider trading on prediction markets.

The move followed a highly timed wager on Polymarket linked to the capture of Venezuelan President Nicolás Maduro.

Reports said a newly created account placed about $32,500 on a contract predicting Maduro would be out of power by January 31, 2026.

The position was opened when shares traded as low as $0.07, purchasing roughly 438,000 contracts.

Within 24 hours, after action by US authorities and an announcement from President Donald Trump, the bet paid out more than $400,000.

The timing raised suspicions among investors and social media users who questioned access to nonpublic information.

I will introduce the Public Integrity in Financial Prediction Markets Act of 2026.

Ritchie Torres said.

The proposed bill would bar federal lawmakers, political appointees and executive branch staff from trading event contracts tied to government actions.

Draft provisions aim to extend insider trading restrictions from traditional securities markets to prediction platforms.

Observers noted similar contracts on rival platforms such as Kalshi were priced significantly higher before the outcome.

Critics argued prediction markets struggle to police material nonpublic information in real time.

Supporters said clearer rules are needed to protect market integrity without harming forecasting tools.