Recent high-stakes trades on Polymarket, related to the unexpected arrest of Venezuela’s Nicolás Maduro, have garnered the interest of Congress. This has prompted US Rep. Ritchie Torres to draft legislation to combat insider trading in prediction markets.
The proposed legislation, named the Public Integrity in Financial Prediction Markets Act of 2026, is being spearheaded by Torres, a Democrat from New York. The bill aims to prohibit specific federal officials from engaging in trades of event contracts linked to government policies, actions, or political results when they utilize confidential information obtained through their official roles.
According to a Sunday update on X by Punchbowl News founder Jake Sherman, the legislation would affect platforms conducting interstate commerce. “The law would apply to the buying, selling, or trading of prediction market contracts related to government policies, actions, or political results on interstate commerce platforms,” shared Sherman, referencing a knowledgeable source.
Trading activities linked to Venezuelan events
Increased scrutiny arose after reports surfaced on X indicating that a recently established Polymarket account poured $30,000 into a contract concerning Maduro’s ousting last Friday. Within approximately 24 hours, this investment reportedly yielded profits exceeding $400,000.
The analytics firm Lookonchain revealed that three wallets amassed over $630,000 from transactions connected to Polymarket contracts predicting Maduro’s removal from office by January 31. Such reports raised concerns about potential access to non-public information by these traders.
The recent US actions leading to Maduro’s arrest provided essential context for these trades. Although the identities of the traders remain unconfirmed, the timing of their trades has attracted attention from lawmakers and market analysts.
Details of the proposed restrictions
If passed, Torres’s bill would prevent politicians, political appointees, and Executive Branch members from trading particular prediction market contracts when they encounter confidential information in the course of their roles. This proposal mirrors the insider trading regulations applicable in traditional financial markets but seeks to adapt those standards for the prediction market sector.
The legislation would focus on event contracts linked to policy choices, governmental actions, and political outcomes, concentrating on the roles of federal officials rather than the activities of the platforms involved.
Similar prior instances raise eyebrows
Concerns over trading based on confidential information in prediction markets extend beyond the Venezuela scenario. Last month, a Polymarket user earned over $1 million from contracts tied to the features and release timelines of forthcoming Google artificial intelligence models, including Gemini 3—raising suspicions about potential insider affiliations with Alphabet, Google’s parent company.
Online discussions have also indicated possible insider trading related to the launch date of DraftKings’ prediction market service. DraftKings Predictions debuted on December 19.
Currently, prediction markets operate with minimal regulations regarding trading on confidential information, unlike traditional security markets. Torres’ initiative seeks to extend aspects of the Stop Trading on Congressional Knowledge Act of 2012, known as the STOCK Act, to encompass prediction markets.