What Is the Prediction Market Integrity Act of 2026?

The Prediction Market Integrity Act of 2026 is a bipartisan bill introduced on March 26, 2026, that would make it illegal for federally elected officials and government employees to use material non-public information to trade on prediction market contracts. The bill was co-sponsored by Senators Elissa Slotkin, Todd Young, Adam Schiff, and John Curtis — a rare bipartisan coalition reflecting growing congressional scrutiny of the prediction market industry.

What the Bill Does

The legislation targets a specific gap in existing law: while insider trading rules are well-established for securities and commodities, prediction market contracts on platforms like Kalshi and Polymarket exist in a regulatory space where traditional insider trading prohibitions may not cleanly apply.

Under the proposed bill:

• Federal officials — including elected representatives, their staff, and executive branch employees — would be prohibited from trading on prediction markets using non-public information obtained through their government roles
• Enforcement authority would be granted to the CFTC, which already oversees Kalshi as a designated contract market
• Penalties would align with existing insider trading frameworks in financial markets

The bill does not prohibit government employees from trading on prediction markets altogether — only from using privileged information to do so.

Why It Matters Now

Several developments in early 2026 pushed this issue to the forefront:

The OpenAI Incident

In February 2026, OpenAI fired an employee for allegedly using confidential company information to trade on prediction market contracts. The incident — reported by Wired and analyzed by S&P Global — highlighted that prediction markets create novel insider trading vectors that existing corporate and regulatory frameworks weren't designed to handle.

State-Level Action

California moved to ban officials from using inside knowledge for prediction market trading in late March 2026, signaling that states aren't waiting for federal action.

Platform Self-Regulation

Both Kalshi and Polymarket updated their terms of service to explicitly prohibit insider trading in March 2026. Kalshi stated publicly that "insider trading violates our rules" and that government employees should be aware that trading on federally regulated markets using material non-public information violates the law — even before this bill was introduced.

The Regulatory Context

The bill sits within a broader congressional effort to define the legal boundaries of prediction markets. Other legislative proposals in 2026 have attempted to restrict prediction markets more broadly — including the BETS Off Act, which sought to limit event contracts on sports. The Prediction Market Integrity Act takes a narrower approach: it accepts that prediction markets will continue operating but aims to ensure market integrity.

This targeted approach is significant. By focusing on insider trading rather than attempting to ban or restructure prediction markets, the bill implicitly legitimizes the industry while addressing one of its most visible vulnerabilities.

What It Means for Operators

For prediction market platforms and B2B infrastructure providers, the bill signals several things:

• Compliance requirements will tighten — platforms will need stronger know-your-customer (KYC) processes to identify government-affiliated traders
• Surveillance systems matter — operators will likely need market surveillance tools capable of detecting trading patterns that suggest insider knowledge
• Self-regulation is not enough — while Kalshi and Polymarket have already updated their rules, federal legislation would create enforceable standards with real penalties
• The industry is maturing — bipartisan support for targeted regulation, rather than blanket bans, suggests prediction markets are being accepted as a permanent feature of the financial landscape

What Comes Next

The bill has been introduced but not yet voted on. Given its bipartisan sponsorship and the relatively narrow scope of its provisions, it has a reasonable path through committee — though the broader political dynamics around prediction market regulation remain contentious.

For the industry, the key takeaway is that the regulatory conversation is shifting from "should prediction markets exist?" to "how should they be governed?" That's a fundamentally different — and more constructive — question.

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Adkuu tracks prediction market regulation and its implications for iGaming and B2B operators.