U.S. Representative Don Davis of North Carolina has introduced the “No Betting on Your Own Race Act,” which would prohibit federal candidates and their family members from trading prediction-market contracts tied to their own elections. Although the bill will not be considered before the 2026 midterm elections, its introduction shows that prediction markets have moved from the fringe to an issue drawing regulatory attention. (Previously: Polymarket co-founder previews Token 2049 speech, prompting community speculation about a token announcement) (Background: Better Markets blasts the CFTC over crypto oversight—but names the wrong agency, and investor protection falls short of the SEC) The U.S. House has seen the first federal bill directly targeting politicians betting on their own elections in prediction markets. On Monday, North Carolina Representative Don Davis introduced the “No Betting on Your Own Race Act,” which would ban federal candidates, their campaign teams, spouses, and children from buying or selling political event contracts related to their own elections. Civil penalties could reach $10,000 per violation or three times the profits. The bill doesn’t name Kalshi or Polymarket, but they’re clearly in the crosshairs. The bill does not specifically name Kalshi or Polymarket, but it uses the broad term “political event contracts,” which clearly encompasses event-contract platforms regulated by the CFTC. This means that regardless of the platform, candidates and their relatives would be barred from trading contracts whose underlying event is the outcome of a U.S. federal election. Davis explained the rationale for the legislation in a press release: to prevent market manipulation, insider trading, and politicians “cashing in” on elections. He argued that politicians have access to information unavailable to ordinary members of the public, such as polling data, fundraising progress, and opponents’ weaknesses. Allowing them to bet on prediction markets, he said, would undermine market integrity and damage public trust in the electoral system. The Laurie Buckhout case was the immediate catalyst. The proposal was directly prompted by the case of Laurie Buckhout, a Republican candidate for the U.S. House, who was disciplined by Kalshi in August. Buckhout traded event contracts related to her own election on the platform. Kalshi ruled that she had violated its terms of use and imposed a three-year suspension and a $2,590 fine. However, this was only a self-regulatory action by the platform, and Buckhout did not face civil or criminal charges. The Buckhout case highlighted a gray area in the current rules: platforms can use their terms of service to restrict politicians from trading, but there is no legal basis to make such penalties enforceable. Davis’s bill aims to fill that legal gap by elevating the rule against betting on one’s own election from a platform policy to federal law. The bill won’t be considered before the midterms. However, the bill is unlikely to make substantive progress before the 2026 midterm elections. The U.S. Congress is currently in recess, and the House and Senate will not return to regular session until November, by which time the midterm elections will be over. In the short term, Davis’s proposal can only remain at the committee stage and cannot proceed to a vote. This also means that U.S. election event contracts on Kalshi and Polymarket will continue trading as usual during the 2026 midterm elections. Kalshi currently lists contracts on which party will control the House and Senate, and market probabilities suggest Democrats are more likely to regain control of Congress in 2027. Prediction markets at a regulatory crossroads. Although the No Betting on Your Own Race Act is unlikely to pass in the near term, it represents a broader trend: prediction markets are moving from the fringes of the crypto world into the mainstream regulatory spotlight. After Kalshi received CFTC approval, event contracts became legal and attracted institutional capital. Polymarket, meanwhile, is facing a lawsuit in New York State over alleged illegal gambling, demonstrating the differences in how various levels of government view prediction markets. This legislative debate is also worth watching in Taiwan. If similar prediction-market platforms emerge in Taiwan in the future, should politicians also be barred from trading on their own election prospects? The issue involves multiple concerns, including electoral fairness, information asymmetry, and market integrity. The current U.S. legislative effort could offer useful lessons. Another point to watch is the scope of the bill’s definitions. The No Betting on Your Own Race Act currently covers “federal candidates and their family members.” Should it be extended to candidates for state office, senior party officials, or close aides to candidates? These are questions the bill would have to address if it is revised in the future. Prediction markets’ transparency and liquidity depend on the size of their participant base. Restricting who can trade too broadly could affect how the markets function, but allowing insider trading to go unchecked would undermine their credibility as a “barometer of public opinion.” Related coverage: Polymarket co-founder previews Token 2049 speech, prompting community speculation about a token announcement; New York sues Polymarket over alleged illegal gambling business; Kalshi bans politicians’ insider-trading bets and market manipulation; CFTC pushes back against states: prediction-market contracts are derivatives, not gambling; Kalshi valuation surges to $40 billion, doubling in four months with Sequoia leading the round. “U.S. lawmaker proposes banning politicians from betting on their own elections! Kalshi and Polymarket caught in the crossfire.” This article was first published by BlockTempo (the most influential blockchain news media outlet).