Federal officials' involvement in prediction markets raises concerns; Torres proposes new regulatory measures

MainnetDelayedAgain · 2026-01-12T20:11:47+00:00

U.S. House Democratic lawmakers introduce the "2026 Financial Prediction Market Public Honesty Act," aimed at restricting government officials from using non-public information to participate in prediction market trading. The bill covers multiple levels of officials to address insider trading issues. Due to recent events raising questions about information fairness, the Senate will discuss related regulatory issues.

MainnetDelayedAgain

2026-01-12 20:11:47

Abstract generation in progress

A group of Democratic members of the U.S. House of Representatives jointly introduced an important bill aimed at closing loopholes that allow insiders within government agencies to trade using prediction markets. The proposal, titled the “2026 Financial Prediction Market Public Honesty Act,” has garnered support from over 30 Democratic lawmakers.

Core Provisions Regulating Government Personnel Participation

The bill’s restrictions cover multiple levels within the federal government system—from senior federal officials and political appointees to regular administrative staff and congressional employees—who are all included within the scope of regulation. The bill explicitly prohibits these individuals from engaging in any contract trading activities related to prediction markets while possessing non-public information.

Washington D.C. Becomes a Breeding Ground for Corruption

Torres emphasized that the combination of prediction markets and federal power has created a breeding ground for corruption. Internal government personnel have an advantage over ordinary investors in accessing key information earlier, and this asymmetry in information access creates conditions conducive to insider trading.

Events That Sparked Legislative Attention

The immediate background prompting the bill was a recent prediction market incident. A platform user accurately forecasted the impeachment of Venezuelan President Maduro and profited approximately $400,000 from related prediction contracts. Shortly afterward, U.S. President Donald Trump announced that U.S. military forces had entered Venezuela and arrested Maduro. These series of events raised questions about the sources of information and the fairness of trading.

Subsequent Regulatory Developments

The Senate is expected to discuss related market structure legislation next week, as regulation of prediction markets is becoming a focal point of congressional attention.

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