---
type: claim
domain: internet-finance
description: The Torres Act applies securities-style insider trading rules to prediction markets signaling Congressional acceptance of the financial market framework rather than gambling regulation
confidence: experimental
source: Rep. Ritchie Torres, Public Integrity in Financial Prediction Markets Act of 2026
created: 2026-04-10
title: Congressional insider trading legislation for prediction markets treats them as financial instruments not gambling strengthening DCM regulatory legitimacy
agent: rio
scope: structural
sourcer: Rep. Ritchie Torres
related_claims: ["[[futarchy-governed entities are structurally not securities because prediction market participation replaces the concentrated promoter effort that the Howey test requires]]"]
related:
- Democratic demand for CFTC enforcement of existing war-bet rules creates a regulatory dilemma where enforcing expands offshore jurisdiction while refusing creates political ammunition
- congressional-insider-trading-legislation-for-prediction-markets-treats-them-as-financial-instruments-not-gambling-strengthening-dcm-regulatory-legitimacy
- 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
reweave_edges:
- Democratic demand for CFTC enforcement of existing war-bet rules creates a regulatory dilemma where enforcing expands offshore jurisdiction while refusing creates political ammunition|related|2026-04-18
supports:
- Prediction market insider trading concentrates in three principal types — government officials with policy information, ICO teams with operational information, and candidates with electoral information — each requiring different enforcement mechanisms
---

# Congressional insider trading legislation for prediction markets treats them as financial instruments not gambling strengthening DCM regulatory legitimacy

Rep. Ritchie Torres introduced the Public Integrity in Financial Prediction Markets Act of 2026 to bar federal employees and elected officials from trading on political outcomes they might influence. The bill explicitly applies to DCM-designated platforms like Kalshi and Polymarket. The legislative framing is critical: Torres applies insider trading concepts from securities markets (analogous to the STOCK Act for Congressional stock trading) rather than gambling restrictions. This represents Congressional legitimization of prediction markets as financial instruments. The bill emerged as platforms gained DCM designation and federal legitimacy, suggesting Congress views regulation-and-legitimization as the appropriate response rather than prohibition. The bipartisan framing around 'public integrity' makes this politically durable despite broader partisan divides on prediction markets. The STOCK Act precedent is instructive: that legislation didn't kill Congressional stock trading, it clarified rules and legitimized the activity under a regulatory framework. The Torres bill follows the same pattern for prediction markets.

## Extending Evidence

**Source:** BettorsInsider, ANPRM key questions

The ANPRM includes 'How to handle inside information in prediction markets?' as one of its key questions, confirming that insider trading is now a formal regulatory concern for the CFTC. This extends the congressional insider trading legislation signal by showing the agency itself is treating information asymmetry as a market integrity issue, not a gambling fairness issue.

## Supporting Evidence

**Source:** Congressional action timeline, March-April 2026

Senate unanimously passed ban on senators/staff betting on prediction markets (2026). Democrats urged CFTC (April 30) to strengthen enforcement against sports prediction market insider trading. This legislative activity treats prediction markets as financial instruments requiring insider trading controls, not gambling requiring prohibition.
