US Representative Ritchie Torres is preparing to introduce new legislation aimed at stopping insider trading on prediction markets. The move follows public scrutiny over a highly profitable bet linked to reports about the sudden capture of Venezuelan President Nicolás Maduro.
According to a Sunday post on X by Jake Sherman, Torres plans to introduce the Public Integrity in Financial Prediction Markets Act of 2026. The proposed bill would ban federal elected officials, political appointees, and executive branch employees from trading prediction market contracts connected to government policy or political outcomes if they hold nonpublic information gained through their official roles.
The restriction would cover the buying, selling, or exchanging of prediction market contracts related to government actions or political events on platforms operating in interstate commerce, Sherman said, citing a source familiar with the proposal.
The bill is modeled on existing insider trading rules in traditional financial markets but would extend those standards to the fast-growing prediction market sector.
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Suspicious Polymarket Trade Draws Scrutiny
The proposal follows a controversial trade on Polymarket, where a newly created account reportedly wagered about $32,000 on a contract predicting the removal of Venezuelan President Nicolás Maduro from power by Jan. 31, 2026. Just hours later, US forces were reported to have captured Maduro, triggering the contract’s settlement and generating more than $400,000 in profit for the trader.
The account showed little prior activity, with the Maduro wager making up most of its total gains. This unusual pattern fueled concerns that someone may have used sensitive political or military information through the prediction market.
Responding to a post by Jake Sherman, Kalshi said its rules strictly ban insiders or decision-makers from trading based on material nonpublic information.
