Published on: January 4, 2026, at 03:49h.
Updated on: January 4, 2026, at 03:49h.
- A New York Democrat is set to propose the Public Integrity in Financial Prediction Markets Act of 2026.
- If enacted, it would prohibit some federal employees from trading event contracts related to political scenarios.
- This initiative appears to be a response to insider trading allegations involving Polymarket related to the US military action in Venezuela.
The upcoming legislation from Rep. Ritchie Torres (D-NY) seeks to prevent specific federal employees from engaging in trading event contracts concerning political and policy outcomes. This action is seemingly driven by allegations of insider trading on Polymarket in connection with the recent US incursion into Venezuela.
On a recent X platform post, following the US military operation leading to the arrest of Venezuelan leader Nicolas Maduro, Punchbowl News founder Jake Sherman indicated that Torres is gearing up to unveil the Financial Prediction Markets Act of 2026.
“The restriction applies to purchasing, selling, or trading prediction market contracts tied to government policy, actions, or political outcomes on platforms involved in interstate commerce,” as noted in Sherman’s post on X.
Should this proposal become law, it would prevent government officials, political appointees, and Executive Branch members from trading event contracts when privy to nonpublic information through their official roles. Essentially, Torres’ bill is an anti-insider trading measure specifically targeting prediction markets.
Motivation Behind the Torres Legislation
The announcement of the Torres bill arose after it was reported on X that a new Polymarket account made a $30,000 investment on an event contract concerning Maduro’s removal. Within just a day, that trader saw substantial returns exceeding $400,000.
Lookonchain, a blockchain analytics firm, highlighted that three wallets, including the aforementioned one, amassed over $630,000 in profits from trades connected to Polymarket contracts anticipating Maduro’s ouster by January 31.
This isn’t the first instance of insider trading accusations surfacing within prediction markets. Last month, a Polymarket user reportedly generated over $1 million in profits from trades regarding upcoming Google AI models, including Gemini 3. There are speculations that this account holder is employed by Alphabet, Google’s parent company.
There have also been discussions surrounding increased trading activity linked to the launch of DraftKings’ prediction market offering, which is suspected to have been driven by insider knowledge. DraftKings Predictions officially went live on December 19.
The State of Prediction Markets
With a surge in insider trading allegations, prediction markets currently resemble a lawless frontier, lacking any regulations around trading on nonpublic information, unlike conventional financial markets.
The proposed Torres legislation is unprecedented and aims to rectify this situation. The bill seeks to extend certain provisions of the STOCK Act (Stop Trading on Congressional Knowledge Act of 2012) to prediction markets.
While the STOCK Act mandates that Congressional members disclose their securities transactions, critics argue that the law doesn’t impose stringent penalties, thus falling short as an effective deterrent against insider trading.