Two United States senators have introduced a new legislative measure titled the End Prediction Markets Corruption Act aimed at preventing federal officials from participating in event based trading. Senators Jeff Merkley and Amy Klobuchar filed the bill on Thursday following reports of trades that suggested the use of nonpublic government information for financial gain.
The proposed law would establish a comprehensive prohibition for the highest levels of the federal government. Under the measure, the president, vice president, and all members of Congress would be strictly forbidden from buying or selling event contracts on any Prediction Markets. The legislation also extends to senior executive branch officials, who would be barred from trading on contracts that directly relate to their official government duties and responsibilities.
The introduction of this bill comes amid increasing scrutiny of how Prediction Markets operate and whether they provide a venue for insider trading. Recent public reports highlighted instances where individuals earned significant payouts on contracts related to military actions and international events shortly before they occurred. Senator Merkley stated that when public officials use nonpublic information to win a bet, it undermines the belief that the government is working for the public good rather than personal profit.
For non elected senior personnel, the bill defines restricted participation based on whether the official is involved in decision making, investigations, or administrative proceedings related to the subject of a contract. These officials are already required to file financial disclosure reports. The new bill would add a requirement for these individuals and elected leaders to disclose whether they or their immediate family members have engaged in any trades on Prediction Markets.
Enforcement of the act would be handled by the United States Attorney General. Those found in violation of the trading ban could face civil penalties of at least 10000 dollars per violation. The Senate bill joins a similar but less restrictive proposal introduced in the House of Representatives earlier this year. While the House version focuses on officials who possess material nonpublic information, the Senate version applies a broader ban to elected officials regardless of their specific access to data. The legislation has been referred for further review as Congress debates the appropriate regulatory framework for the growing industry of Prediction Markets.
