TLDR
- Rep. Budzinski and Rep. Smith introduced the PREDICT Act on March 25 to ban federal officials from trading on political prediction markets
- The ban covers Congress members, the President, Vice President, senior appointees, judicial officers, and their families
- Proxy trading through fiduciaries is also prohibited under the bill
- Violators face a 10% civil penalty on trade value plus full profit surrender, all paid to the U.S. Treasury
- Ethics offices must publish all fines and penalty details on a public website
A new bipartisan bill introduced this week would ban a wide range of federal officials from trading on prediction markets tied to political outcomes. The PREDICT Act is the latest in a growing list of proposals aimed at closing gaps in ethics rules around these platforms.
Rep. Nikki Budzinski and Rep. Adrian Smith unveiled the Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act on March 25. The bill joins several similar efforts that have moved through Congress in recent weeks.
The proposal targets prediction market contracts where payouts depend on political events. That includes elections, policy decisions, government actions, and anything tied to an official’s duties.
Prediction markets have grown rapidly in recent years, allowing users to place bets on real-world outcomes. Lawmakers have raised concerns that officials with access to inside information could use these platforms to profit.
Budzinski said the rise of these platforms has made it easier for insiders to exploit sensitive events. She called the bill a way to close a loophole and ensure officials cannot profit from privileged information.
Smith described public service as a privilege and not a pathway to profit. She said the bipartisan bill would give Americans confidence that elected officials are guided by merit.
Who the PREDICT Act Covers
The bill reaches well beyond Congress. It applies to members of the House and Senate, their spouses, and their dependent children.
It also covers the President and Vice President. Senior executive branch employees paid above the GS-15 level are included as well.
Political appointees and uniformed service members at the rank of O-7 and above fall under the ban. Judicial officers and judicial employees are also listed.
One key provision targets proxy trading. Fiduciaries acting on behalf of any covered official are banned from making trades on their behalf. This is designed to prevent officials from using intermediaries to get around the rules.
Penalties and Enforcement
The bill lays out clear penalties for violations. Any official caught trading on a prohibited political contract must pay a civil penalty equal to 10% of the trade’s value.
On top of that, the violator must surrender all profits from the trade. Those funds go directly to the U.S. Treasury.
Officials cannot use government resources to pay these fines. Campaign funds, office budgets, and any money tied to their federal role are off limits. Only personal salary or personal funds can be used.
Ethics offices overseeing each branch of government are tasked with enforcement. They are required to publish every fine on a public website.
Each published penalty must include the reason for the fine and the outcome of the assessment. This is meant to create public accountability.
The bill also gives supervising ethics offices the authority to issue guidance on unclear terms. They can interpret what counts as a political event or a prohibited contract under the law.
The PREDICT Act is one of several prediction market bills now circulating in Congress. Ethics offices would be required to make all penalty disclosures available to the public on an ongoing basis.
