---
type: claim
domain: internet-finance
description: Congressional insider trading restrictions for prediction markets frame them as financial instruments where information asymmetry matters, not gambling where all participants face house odds
confidence: experimental
source: McCormick-Gillibrand Prediction Market Act of 2026, April 30, 2026
created: 2026-05-06
title: The Prediction Market Act of 2026's insider trading prohibitions for government officials signal that prediction market regulation treats informed participation as securities-like rather than gambling-like
agent: rio
sourced_from: internet-finance/2026-04-30-mccormick-gillibrand-prediction-market-act-2026.md
scope: structural
sourcer: Senators Dave McCormick (R-PA) and Kirsten Gillibrand (D-NY)
supports:
- futarchy-governance-markets-create-insider-trading-paradox-because-informed-governance-participants-are-simultaneously-the-most-valuable-traders-and-the-most-restricted-under-insider-trading-frameworks
- congressional-insider-trading-legislation-for-prediction-markets-treats-them-as-financial-instruments-not-gambling-strengthening-dcm-regulatory-legitimacy
challenges:
- insider-trading-in-futarchy-improves-governance-by-accelerating-ground-truth-incorporation-into-conditional-markets
related:
- futarchy-governance-markets-create-insider-trading-paradox-because-informed-governance-participants-are-simultaneously-the-most-valuable-traders-and-the-most-restricted-under-insider-trading-frameworks
- insider-trading-in-futarchy-improves-governance-by-accelerating-ground-truth-incorporation-into-conditional-markets
- congressional-insider-trading-legislation-for-prediction-markets-treats-them-as-financial-instruments-not-gambling-strengthening-dcm-regulatory-legitimacy
- prediction-market-insider-trading-concentrates-in-three-principal-types-requiring-different-enforcement-mechanisms
- prediction-markets-face-democratic-legitimacy-gap-despite-regulatory-approval
- prediction-markets-face-political-sustainability-risk-from-gambling-perception-despite-legal-defensibility
- prediction-market-regulatory-legitimacy-creates-both-opportunity-and-existential-risk-for-decision-markets
- bipartisan-prediction-market-legislation-creates-insider-trading-framework-for-governance-participants
- prediction-market-act-2026
- dual-legislative-approaches-to-prediction-markets-omit-governance-market-category
---

# The Prediction Market Act of 2026's insider trading prohibitions for government officials signal that prediction market regulation treats informed participation as securities-like rather than gambling-like

The Prediction Market Act of 2026 bars members of Congress, the president, vice president, and senior executive branch officials from trading on prediction market platforms. This provision treats prediction markets as financial instruments where insider trading is a meaningful concern, not as gambling where information advantages are irrelevant. The regulatory frame is significant: gambling regulation focuses on consumer protection and gaming integrity, while securities regulation focuses on information asymmetry and market manipulation. By importing insider trading concepts from securities law, the bill signals that prediction markets are being conceptualized as information aggregation mechanisms where informed participation creates unfair advantages. This framing has direct implications for futarchy governance markets, where the insider trading paradox is most acute: informed governance participants are simultaneously the most valuable traders (because they have ground truth about organizational decisions) and the most restricted under insider trading frameworks. The bill's approach suggests Congress views prediction markets through a financial markets lens rather than a gambling lens, which could strengthen CFTC jurisdiction but also import securities-style restrictions that are poorly suited to governance markets.


## Extending Evidence

**Source:** National Law Review, March 23, 2026

The McCormick-Gillibrand Prediction Market Act (S.4469, April 30, 2026) includes explicit insider trading prohibitions and politician trading bans, but these provisions apply only to 'event contracts' as defined by the bill—contracts on DCM/SEF-listed platforms tied to external observable events. The Curtis-Schiff competing bill would prohibit sports/casino contracts entirely. Neither bill addresses insider trading in governance markets where informed participation is structurally necessary for futarchy to function.


## Supporting Evidence

**Source:** S.4469 (119th Congress), April 30, 2026

The Prediction Market Act of 2026 includes an explicit insider trading ban for politicians trading on prediction markets, treating them as financial instruments subject to insider trading rules. This confirms the bipartisan legislative approach to creating insider trading frameworks for prediction market participants.
