U.S. Congress proposes to regulate insider trading in prediction markets; Maduro's betting case sparks controversy

A report of the arrest of Venezuelan President Nicolás Maduro (Nicolás Maduro) coincided with a surge in betting on prediction markets that quickly earned over $400,000, drawing attention from U.S. political circles. U.S. Democratic Congressman Ritchie Torres has begun preparing a new bill to extend the regulatory principles of “insider trading” to political and policy prediction markets.

Legislative Developments Revealed: Congress Plans to Regulate Political Prediction Markets

According to Jake Sherman, founder of Punchbowl News, who disclosed on Twitter (X) on January 4th, U.S. Federal Congressman Ritchie Torres is preparing to introduce the “Public Integrity in Financial Prediction Markets Act of 2026” (Public Integrity in Financial Prediction Markets Act of 2026).

Sherman cited informed sources indicating that the bill would prohibit federal elected officials, political appointees, and administrative civil servants from trading prediction contracts related to government policies, actions, or political outcomes when they possess non-public information obtained through their official duties.

The restrictions would cover buying, selling, and exchanging contracts and would apply to all prediction market platforms engaged in interstate commerce. After Sherman’s post, Congressman Torres also retweeted the message.

Extending Insider Trading Regulations to Financial Markets

Sources say that the legislative approach will mirror existing insider trading regulations in traditional financial markets such as stocks and futures, explicitly extending the principle that “material non-public information must not be used for trading” to political prediction markets.

This also means that prediction market trading behaviors, which have been relatively ambiguously classified legally in the past, may in the future be formally incorporated into a regulatory framework similar to that of traditional financial markets.

Betting Incident Sparks Controversy: Maduro Arrest and Betting Case Becomes Focus

The legislative discussion was triggered by a recent high-profile transaction in a prediction market. A few days ago, a newly created account on Polymarket placed a bet of approximately $32,000 on the prediction that “Venezuelan President Nicolás Maduro will step down before January 31, 2026.”

Subsequently, news emerged that the U.S. had “suddenly captured” Maduro, leading to the rapid settlement of the related contract. The trader ultimately profited over $400,000. Since this account had little prior trading history and nearly all profits came from this bet, the market paid close attention to whether there was any information asymmetry or timing advantage involved.

Platform Responses and Regulatory and Security Concerns

In response to the discussions, prediction market operator Kalshi stated under Sherman’s post that their platform’s rules explicitly prohibit insiders or decision-makers from trading based on material non-public information. Meanwhile, Polymarket has recently faced account security issues.

Reports indicate that multiple users experienced abnormal logins on Polymarket, resulting in forced liquidation of holdings and significant fund reductions. Polymarket explained that the issue stemmed from security vulnerabilities introduced by a third-party identity verification provider, which has now been patched. The company emphasized that only a small number of users were affected, that there is no ongoing risk, and that they will proactively contact affected accounts.

(Just struck Venezuela! Trump is also considering military action against Colombia, Mexico, and Cuba)

This article, “U.S. Congress Plans to Regulate Insider Trading in Prediction Markets; Maduro Betting Case Sparks Controversy,” originally appeared on Chain News ABMedia.