Can Government Officials Trade on Prediction Markets?

As of March 2026, there is no federal law explicitly prohibiting U.S. government officials from trading on prediction markets — but that's changing fast. Multiple pieces of legislation are moving through Congress to restrict or ban government participation in prediction markets, driven by high-profile incidents where classified information appeared to influence market trades.

Current Legal Status

Government employees are subject to ethics rules that prohibit using non-public information for personal financial gain. However, these rules were designed for securities and financial markets, not event-based prediction contracts. The legal gap means:

• Prediction market trades aren't covered by the STOCK Act, which prohibits congressional insider trading in securities.
• Agency ethics policies vary. Some departments have updated their codes of conduct to explicitly mention prediction markets; most haven't.
• CFTC oversight is limited. The CFTC regulates event contracts but hasn't specifically addressed government employee participation.
• Anonymous platforms bypass oversight entirely. A government official can create a pseudonymous account on Polymarket (which operates offshore) without any disclosure requirement.

Why It's Becoming an Issue

Several incidents in early 2026 made government participation in prediction markets a front-page concern:

• Suspicious trades appeared on Polymarket before U.S. military operations became public, raising questions about whether government or military insiders were profiting.
• Reports surfaced that members of Congress and their staff were actively trading on Kalshi, including on markets related to policy outcomes they could influence.
• Two individuals in Israel were indicted for using classified military intelligence to profit on prediction markets, highlighting the international dimension.

Legislative Responses

Three major pieces of legislation are targeting the issue:

End Prediction Market Corruption Act

Introduced by Senators Jeff Merkley and Amy Klobuchar in March 2026. This bill would ban federal elected officials and senior government employees from participating in prediction markets. Notably, Kalshi — one of the largest regulated prediction market platforms — publicly supported the bill, seeing regulated prohibition as preferable to operating under ethical uncertainty.

DEATH BETS Act

Introduced by Representative Mike Levin and Senator Adam Schiff. While primarily focused on banning war and assassination contracts, this legislation would also create reporting requirements that would make government employee participation more visible.

Bipartisan Ethics Updates

Several members have introduced narrower measures to update the STOCK Act to explicitly include prediction market contracts, applying existing congressional trading restrictions to event-based betting.

What This Means for the Prediction Market Industry

The government trading debate is actually constructive for the regulated prediction market industry:

1. Platforms that support the ban gain credibility. Kalshi's endorsement of the Merkley-Klobuchar bill signals that established platforms want clear rules — even restrictive ones — rather than regulatory ambiguity.

2. KYC-verified platforms can enforce restrictions. Regulated platforms with identity verification can block government employees from trading; anonymous, offshore platforms cannot. This strengthens the case for CFTC-licensed markets.

3. Category-specific restrictions are coming. Markets on government policy outcomes (interest rate decisions, regulatory actions, defense spending) will likely require enhanced surveillance or restricted participation — similar to how securities markets restrict insider trading.

What Operators Should Know

For iGaming operators considering a prediction market vertical:

• Plan for restricted participant categories. Your platform will need the ability to verify employment status and restrict access for government employees, just as financial platforms currently do.
• Market design matters. Avoid contract designs that create obvious insider-knowledge advantages for government participants. Economic indicators and broad policy outcomes carry higher regulatory risk than entertainment or sports categories.
• Surveillance infrastructure is non-negotiable. Regulators will expect the same suspicious-activity monitoring for prediction markets that exists for sports betting — and government employee trading will be a specific red flag.

The direction is clear: government officials will eventually be prohibited from trading on prediction markets in most jurisdictions. Operators who build compliance infrastructure now will be ahead when restrictions formalize.

---

Last verified: March 2026