(The Center Square) – The Senate's ethics committee told senators in May that prediction market trades must be reported. The House Ethics Committee has issued no such guidance, and its chief counsel would not say whether it will.
Asked whether the committee had decided if such trades are reportable by House members, and whether any member had reported one, Tom Rust, the committee’s staff director and chief counsel, responded with two words: "No comment."
Members of Congress are already barred from using nonpublic government information to trade commodity futures, options or swaps under Section 4c of the Commodity Exchange Act, as amended by the STOCK Act, according to the Congressional Research Service.
What is unsettled is whether prediction market contracts count. CRS reported in August that it is uncertain whether federal disclosure law covers event contracts, and that no supervising ethics office outside the Senate has published guidance on the question.
The sponsor of the House bill said much the same at its markup.
"Under current law, lawmakers are not explicitly prohibited from using prediction markets," said Rep. Bryan Steil, R-Wis., who chairs the House Administration Committee.
Of insider trading rules, he said: "I think it would already be illegal. Maybe. Maybe not. Let's just make it explicit."
The Senate settled the question for itself. It adopted Senate Resolution 708 on April 30, amending Senate Rule 37 to bar senators, officers and employees from trading event contracts. The Senate Select Committee on Ethics followed on May 5 with a guidance letter saying the trades are reportable as commodity futures and require a periodic transaction report. The same disclosure law the Senate cited applies to House members.
The Congressional Budget Office on Monday priced Steil's bill at effectively nothing. Among its reasons: "limited evidence that the covered people currently participate in such markets."
Steil's House bill 9367, the Stop Lawmakers From Predicting Act, would bar members of Congress, their spouses and dependent children from trading contracts tied to government policy, a government action, a political outcome or anything a member learns through congressional service. Violators would owe $2,000 or 10% of the value of the transaction, whichever is greater, plus any profit.
Prediction markets such as Kalshi and Polymarket let users buy contracts that pay out if a specific event happens. Contracts cover sports, elections and government decisions, along with Oscar winners and video game release dates.
Army Master Sgt. Gannon Ken Van Dyke pleaded not guilty in April to federal charges that he used classified details of the mission that captured former Venezuelan President Nicolás Maduro to make about $410,000 on Polymarket.
The Commodity Futures Trading Commission filed a parallel civil complaint the same day. David Miller, the agency’s enforcement director, said it was “the first time the CFTC has charged insider trading involving event contracts.” Polymarket said it flagged the trades and referred them to the Justice Department.
Steil's committee ordered his bill reported June 24 on a 5-4 vote. Nearly four months later, no report has been filed, and the bill's status on Congress.gov remains "introduced."
Democrats voted against it, saying it was too weak.
"I support the policy goal," said Rep. Joseph Morelle, D-N.Y., the committee’s ranking member. "The behavior is too pernicious for a half measure."
Morelle noted the bill takes effect 180 days after enactment and that two House resolutions imposing an immediate ban have gone nowhere.
"The Senate did it in a matter of minutes. No six-month grace period, no procedurally laborious process," he said. "They just went to the floor with a two-page resolution and banned it all unanimously. We should do the same."
Steil said a broader ban would sweep in a member’s college-age child placing a $10 bet on the NCAA tournament, which "would trigger a federal violation of the underlying member."
Five Republicans voted to report the bill: Steil, Rep. Laurel Lee, R-Fla., Rep. Barry Loudermilk, R-Ga., Rep. Stephanie Bice, R-Okla., and Rep. Mary Miller, R-Ill. Four Democrats voted no: Morelle, Rep. Terri Sewell, D-Ala., Rep. Norma Torres, D-Calif., and Rep. Julie Johnson, D-Texas. Three Republicans were not recorded: Rep. Morgan Griffith, R-Va., Rep. Gregory Murphy, R-N.C., and Rep. Mike Carey, R-Ohio. All three are cosponsors.
Steil's office provided the roll call and the amended bill text but did not say why the report has not been filed.
Asked whether executive branch employees must report such trades, White House spokesman Davis Ingle said all federal employees are subject to ethics rules that prohibit using nonpublic government information for personal financial gain.
CBO did not respond to questions about what evidence it consulted. The CFTC and the Senate Select Committee on Ethics also did not respond.
CBO's estimate runs two pages. Direct spending through 2036: zero. Revenue from the new penalties through 2036: an asterisk, which CBO uses for anything under $500,000. Spending subject to appropriation after 2031: "not estimated." The agency said it expects few violations.
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