Pelosi and 30 Democrats Propose Ban on Prediction Markets Following Suspicious $400K Bet on Maduro

Over 30 Democrats in the U.S. House of Representatives, including former Speaker Nancy Pelosi, are backing new legislation aimed at restricting the involvement of government officials in prediction markets. This move follows a significant and questionable bet of $400,000 on Venezuelan President Nicolás Maduro's removal, which raised concerns about potential insider trading in these markets.

Key Takeaways

A new bill aims to limit government officials' participation in prediction markets.
The legislation was sparked by a large bet on Maduro's ousting before his unexpected arrest.
It seeks to extend existing insider trading regulations to prediction markets.
The bill has support from influential House Democrats, including Nancy Pelosi.
Prediction markets have seen rapid growth in trading volume, especially around political events.

Legislation to Address Insider Trading Concerns in Prediction Markets

A new piece of legislation, backed by over 30 Democrats, including former House Speaker Nancy Pelosi, is aiming to restrict government officials from engaging with prediction markets. The proposed legislation follows a contentious bet made on Polymarket—initially at $32,000 but ballooning to over $400,000 just before the unexpected detention of Venezuelan President Nicolás Maduro.

The bill, introduced by Representative Ritchie Torres from New York, is titled the Public Integrity in Financial Prediction Markets Act of 2026. Torres highlighted that the bill was initiated after a new account on Polymarket placed a significant wager on the likelihood of Maduro being ousted by the end of January 2026, despite market predictions suggesting it was highly unlikely at the time.

A few hours after the bet was placed, U.S. officials announced that Maduro and his wife, Cilia Flores, had been arrested in a coordinated overnight operation by the Trump administration. Following the news, the contract in question hit the maximum payout limit, resulting in returns exceeding 1,200%. This raised alarms among lawmakers and market analysts about the possibility of the bet being based on nonpublic, material information.

Torres asserted that this incident highlighted a significant gap in federal regulations concerning prediction markets, especially when they relate to crucial political or military decisions.

Stricter Regulations for Government Officials

The proposed legislation would prohibit federally elected officials, political appointees, executive branch employees, and Congressional staff from buying, selling, or trading prediction market contracts connected to government actions, policies, or political outcomes. While the bill does not introduce new penalties, it aims to clarify and extend existing insider trading regulations to the realm of prediction markets, which currently function in an uneven regulatory landscape.

Torres explained that the blend of governmental operations and prediction markets creates a tangible risk to public integrity, emphasizing that officials should not profit from the impacts of their actions. Concerns similar to those raised by Torres have also been voiced by legal and economic experts, who believe that insider trading damages market confidence and reduces the effectiveness of prediction markets as forecasting tools.

The legislation has garnered wide support, co-sponsored by a diverse group of House Democrats, including Pelosi, Rashida Tlaib, Brad Sherman, Seth Moulton, and many senior lawmakers. Advocates argue that this bill builds upon the principles set forth by the STOCK Act, which regulates insider trading by Congress members in traditional financial markets, adjusting those rules to fit modern financial instruments.

Growth of Prediction Markets Amid U.S. Policy Changes

This legislative push comes as prediction markets continue to grow rapidly, with total trading volume across major platforms surpassing $44 billion in 2025 and weekly volumes exceeding $5 billion in early January 2026. Political events, particularly elections and critical geopolitical events, have become some of the most actively traded areas within these markets.

At the federal level, the regulatory approach to prediction markets has transitioned from outright bans to a more lenient framework, following a series of court rulings. In 2024, a federal court determined that the Commodity Futures Trading Commission (CFTC) had overstepped its authority in blocking election-related prediction contracts, a decision confirmed upon appeal.

Earlier regulatory actions had driven platforms out of the U.S. market; Polymarket was halted in 2022 after reaching a settlement with the CFTC over operating an unregistered platform. Kalshi also faced restrictions on listing election contracts in 2023 despite its status as a regulated exchange.

In 2025, the CFTC dropped its enforcement actions and has since adopted a more innovation-friendly stance, issuing no-action letters for specific event contracts in December 2025.