Bill aims to prevent government officials from using prediction market platforms

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The Backstory

Why the push is accelerating now

A fresh proposal in Congress to bar federal officials from using prediction markets lands amid a broader reckoning over how governments police real‑money wagers on news, sports and politics. The bill arrives after high‑profile wins on decentralized platforms raised questions about insider access and the appearance of impropriety in public service. Sponsors are framing the measure as a bid to close integrity gaps before an election year that will test the boundaries between information, influence and online betting.

That urgency has been building as prediction platforms expand into adjacent markets and as enforcement agencies test their authority. The message from regulators is converging: when wagers intersect with policymaking, markets must yield to public‑interest safeguards. The debate now centers on where to draw those lines and who gets to enforce them.

State regulators have been out front

States have set the practical limits for how far event‑based wagering can go, often moving faster than Washington. In Ohio, the standoff between the Casino Control Commission and Kalshi crystallized that approach. The platform sued in federal court to block the state from treating its “event contracts” as sports bets requiring a state license, arguing federal law allows its model. Ohio countered with warnings to sportsbooks that any partnership with Kalshi, even outside the state, could jeopardize their licenses. The company’s complaint, filed Oct. 7, seeks an injunction to keep the state from blocking operations ahead of an Oct. 20 hearing. The clash, detailed in Kalshi’s suit against Ohio regulators, underscores how state rules can chill national expansion long before Congress acts.

The posture is not isolated. Massachusetts Attorney General Andrea Joy Campbell also sued Kalshi last month for allegedly promoting and taking online sports wagers without authorization, signaling that multi‑state enforcement can emerge quickly once one regulator moves. For platforms that market “event contracts” rather than sports bets, the distinction matters less than the willingness of states to assert jurisdiction.

Legislatures are tightening definitions and penalties

Lawmakers are also rewriting statutes to clarify what counts as legal gaming and who gets to offer it. In Florida, a sweeping measure for the 2026 session would ban all non‑Seminole Tribe gaming and explicitly penalize wagering with insider knowledge. The proposal would make it a third‑degree felony to bet on events known to be prearranged or predetermined. As outlined in Florida’s bid to ban non‑Seminole gaming and curb insider bets, the bill follows an earlier attempt to crack down on sweepstakes gaming and mirrors a broader industry trend, including Google’s recent advertising restrictions, to narrow gray areas that blur social gaming and gambling.

The legislative tack matters for prediction markets because it reframes them not as novel financial instruments but as wagers captured by familiar gambling statutes. By codifying insider‑betting penalties and channeling all legal wagering through a limited set of operators, Florida’s plan would leave little room for platforms that rely on open participation and granular event markets.

Payments and policing abroad offer a template

Outside the United States, regulators are relying on payment pipes to enforce licensing rules. Brazil’s Secretariat of Prizes and Bets issued a normative ordinance in March that bars payment providers from holding accounts for unlicensed betting operators and from processing transactions to and from unregulated gambling sites. Providers must detect and report suspected unauthorized gambling within 24 hours, including taxpayer IDs and remedial steps taken. The policy, tied to Brazil’s 2023 law legalizing online gambling, is outlined in Brazil’s updated rules to prevent illegal gambling payments.

For prediction markets that rely on seamless deposits and withdrawals, the Brazilian approach illustrates how financial controls can be as decisive as licensing. It also highlights a trend toward deputizing intermediaries to monitor risky behavior. If federal agencies in the U.S. pursue similar tactics, platforms could face de facto access limits even without an outright ban.

Public servants under stricter conduct rules

Governments are also writing bright‑line codes for their own employees. The Philippines recently extended its existing casino prohibition for public servants to include all forms of online gambling, citing constitutional duties and ethical standards for officials. The Department of the Interior and Local Government warned that online gambling poses an equal or greater threat to integrity than traditional casinos and said violations will bring administrative or criminal sanctions. The move, described in the Philippines’ ban on online gambling for government workers, reflects a global recalibration of conflict‑of‑interest rules in a digital era.

That stance sits alongside a broader campaign against illicit operators. After President Ferdinand Marcos Jr. banned offshore operators in July, authorities stepped up raids to shutter outfits that persisted and to rescue trafficked workers. The Presidential Anti‑Organized Crime Commission says it aims to eradicate illegal POGOs by year‑end, an effort detailed in the crackdown targeting illegal POGOs. The twin actions — tightening employee ethics and dismantling unlicensed operations — show how governments are linking public trust to clean, regulated markets.

What’s at stake for platforms and policymakers

The federal bill barring officials from prediction markets is tailored to a specific integrity risk: the possibility that people with nonpublic information could trade on it or appear to benefit from it. That risk sharpened after a series of eye‑catching wagers on geopolitical events fueled speculation about insider access. Platforms argue they ban trading on nonpublic information and that markets can improve public forecasting. But the optics collide with a political climate already primed by insider‑trading scandals in equities and by expanding sports betting.

The outcome will influence how prediction markets position themselves. If Congress codifies a ban for public officials and federal appointees, platforms will face compliance screens that resemble know‑your‑customer checks focused on employment and access. If states continue to assert that event contracts are sports bets, companies may need state licenses to operate in major markets, a model that favors larger, well‑capitalized firms. And if payment networks adopt Brazil‑style obligations, access could tighten even where laws remain ambiguous.

There is also a political dimension. High‑profile backers have attached themselves to event‑driven trading, seeing a commercial opening between finance and entertainment. At the same time, regulators and attorneys general are signaling that public confidence takes precedence over innovation when the two collide. As more lines are drawn — by courts in Ohio and Massachusetts, by lawmakers in Florida, and by regulators abroad — prediction markets face a regulatory perimeter that is becoming clearer and narrower. The federal bill now on the table fits that arc, turning a patchwork of state and international experiments into a national debate over the rules of who can play, what they can bet on and why it matters.