Controversy around prediction markets has largely centered on sports event contracts, but mysterious trades tied to the U.S. military action in Venezuela have prompted one lawmaker to fast-track plans for federal legislation aimed at stopping insider trading.
Suspiciously timed trades on Polymarket—including whether president Nicolás Maduro would be removed from power by the end of this month—went viral on social media and made mainstream headlines, including in the Wall Street Journal. One newly-created account reportedly made more than $400,000 in less than 24 hours, raising questions about potential insider information.
The saga has spurred Rep. Ritchie Torres (D., N.Y.) to take action. Torres intends to introduce federal legislation “this week” that is meant to curb insider trading on prediction-market platforms, his communications director Benny Stanislawski told Front Office Sports. He did not specify what day the bill would be proposed.
The bill, called the Public Integrity in Financial Prediction Markets Act of 2026, was first reported by Punchbowl founder Jake Sherman.
“We’ve been working on the bill for a little while now, but as Jake Sherman initially reported, we made the bill public the other day in response to the Maduro news he QTed,” Stanislawski said.
The legislation would bar federal elected officials, political appointees, and employees of the executive branch from trading on event contracts tied to government policy, government action, or political outcomes if they either possess “material nonpublic information” or could “reasonably” obtain it in the course of their official duties, according to a copy of the bill shared with FOS.
Polymarket did not immediately respond to a request for comment. Its main rival, Kalshi, noted on social media that it has a specific rule prohibiting those with “material non-public information” about a given contract from trading on that contract, directly or indirectly.
Kalshi spokesperson Elisabeth Diana said in an email to FOS that the company is “looking at the specifics of the bill, but we already ban the activity it cites and are in support of means to prevent this type of activity.”
This is not the first time Venezuela has come up with regard to suspicious Polymarket trades. In October, hours before the winner of the Nobel Peace Prize was announced, a newly created account reportedly won more than $50,000 putting money on María Corina Machado to receive the prize. After she did, the Norwegian Nobel Institute said it would initiate an investigation to determine whether someone “unlawfully obtained information from us.” The Norwegian Nobel Institute did not immediately respond to a request for comment Monday.
Torres is not the first lawmaker to question the integrity of prediction markets, nor is he the first New York politician to take aim at the industry. Assemblyman Clyde Vanel introduced a bill in November that would give the state authority to regulate or ban prediction markets. In September, a bipartisan group of lawmakers from Utah, Arizona, Michigan, and California issued a letter to the Commodity Futures Trading Commission(CFTC)—the federal regulator that oversees prediction markets—outlining concerns about sports event contracts.
Prediction markets exploded in 2025, with Polymarket and Kalshi both raising billions of dollars and traditional sports betting giants like DraftKings and FanDuel launching platforms of their own.
Kalshi, Robinhood, Crypto.com, and others have faced pushback from state regulators, and numerous lawsuits are winding through the court system. The crux of the legal fight is whether there’s any distinction between traditional sports betting and sports event contracts. Traditional sports betting is regulated on a state-by-state basis in the U.S., while prediction-markets platforms like Kalshi have been offering contracts in all 50 states. Currently, 39 states and Washington, D.C., allow some form of online betting.
Since returning to the U.S. after a nearly four-year hiatus during which it was prohibited from operating in the country under a settlement with the Biden administration, Polymarket has avoided legal and regulatory scrutiny.
