Public Integrity in Financial Prediction Markets Act of 2026
WAL26165 D7M S.L.C.
Identifier: S. ___ (119th Congress, 2d Session) — WAL26165 D7M S.L.C.
Full title: Public Integrity in Financial Prediction Markets Act of 2026
Status: Introduced, referred to Committee
Sponsors: Sen. Elissa Slotkin (D-MI), Sen. Todd Young (R-IN), Sen. Adam Schiff (D-CA), Sen. John Curtis (R-UT) — bipartisan
Amends: Chapter 131, Title 5, United States Code — adds Subchapter IV
Plain-language summary: This bill would prohibit government officials — from the President down to executive agency employees — from using insider information gained through their official duties to make money on prediction market platforms (sites where people bet on the outcome of political and economic events). Officials who violate the prohibition face civil fines of either $500 or double their profit, whichever is higher. Covered officials must also report any prediction market transaction over $250 within 30 days. Enforcement is delegated to existing ethics offices, which have 180 days to establish implementing procedures.
Verdict: The Public Integrity in Financial Prediction Markets Act addresses a real and serious structural problem — officials profiting from insider information on prediction markets — but its prohibition is so narrowly scoped and so dependent on self-reporting that the bill functions more as a disclosure regime than a genuine prohibition. In practice, the bill prohibits a hard-to-prove mental state, delegates enforcement to fragmented offices with uneven procedural footing, and provides no independent detection architecture. The reportable trade becomes legible; the prohibited trade remains difficult to detect. These are correctable defects. The legislative record should treat this bill as a floor, not a ceiling.
Legal Impact Assessment
This section asks what survives judicial review, what is legally vulnerable, and what is structurally sound. Confidence is reported on two axes: Textual Finding (how clearly grounded in statutory text) and Litigation Risk (how likely to generate a viable legal challenge).
What this bill actually prohibits
The core prohibition (§13152) is narrower than its framing suggests. The bill does not prohibit covered officials from participating in prediction markets. It prohibits them from using material nonpublic information derived from their position to profit through covered transactions.
An official who trades using only publicly available information — even if their inside knowledge of likely policy outcomes informs their judgment — may not be covered. The bill targets the information source, not the activity. Proving that a specific trade was based on MNPI derived from a position is a significantly higher burden than proving that a covered official made a prediction market trade at all.
The STOCK Act (15 U.S.C. § 78u-1) offers an analogous data point: applying a comparable MNPI framework to securities trading by government officials produced few prosecutions despite widespread belief that insider trading by officials occurs. That parallel is an inference across different asset classes and reporting architectures, not a settled identity — but the evidentiary structure is similar enough to warrant the comparison. See Dirks v. SEC, 463 U.S. 646 (1983) (tipper/tippee liability illustrating the evidentiary demands of MNPI-use prohibitions); Salman v. United States, 580 U.S. 39 (2016) (gift of confidential information to a family member can satisfy personal benefit element).
Textual Finding: High — the prohibition’s scope is unambiguous from §13151(1) and §13152.
Litigation Risk: Low — applying an MNPI standard to government officials has solid constitutional precedent. The vulnerability is structural and evidentiary, not constitutional.
The “notwithstanding any other provision of law” clause (§13153)
The penalty section states that fines apply “notwithstanding any other provision of law, including any regulation.” Courts read “notwithstanding” as a strong instruction to override conflicting provisions, but not as a limitless repeal. Cisneros v. Alpine Ridge Group, 508 U.S. 10, 18 (1993). Courts disfavor implied repeals beyond the specific conflict addressed. Watt v. Alaska, 451 U.S. 259, 267 (1981). Such clauses do not ordinarily eliminate constitutional constraints without a clear statement. Webster v. Doe, 486 U.S. 592, 603 (1988).
APA §554 formal adjudication theory: APA formal adjudication triggers only when a statute requires a matter be determined “on the record after opportunity for an agency hearing.” This bill uses neither phrase, delegating procedure entirely to each supervising ethics office (§13154(b)). Additionally, three of the four supervising ethics offices are not APA “agencies” at all (see below). The APA §554 hook is weak to nonexistent. Textual Finding: High | Litigation Risk: Low
Fifth Amendment procedural due process theory: The bill mandates fines (§13153(a)) but specifies no procedural baseline — no notice requirement, no right to present evidence, no neutral decisionmaker, no appeal mechanism, no judicial review pathway. Constitutional adequacy is evaluated under Mathews v. Eldridge, 424 U.S. 319 (1976). Thin implementing procedures will invite as-applied due process challenges. Textual Finding: Medium (depends on what procedures offices adopt) | Litigation Risk: Medium
Fragmented multi-office enforcement and the APA asymmetry problem
The bill delegates enforcement to “supervising ethics offices,” imported from 5 U.S.C. §13101 (§13151(7)). Section 13101(18) defines four such offices: the Senate Select Committee on Ethics, the House Committee on Ethics, the Judicial Conference, and the Office of Government Ethics. Each must impose penalties, establish its own procedures, and issue its own rules and guidelines in consultation with CFTC (§13154(a)–(c)).
These four entities have materially different APA status. The APA excludes “Congress” and “the courts of the United States” from its definition of “agency.” 5 U.S.C. §551(1).
Senate Ethics Committee — Not an APA agency. Congress expressly excluded. 5 U.S.C. §551(1)(A).
House Ethics Committee — Not an APA agency. Same basis.
Judicial Conference — Very likely not an APA agency. Courts expressly excluded. 5 U.S.C. §551(1)(B); Washington Legal Foundation v. U.S. Sentencing Commission, 17 F.3d 1446 (D.C. Cir. 1994).
Office of Government Ethics — APA agency. Executive-branch authority not within any APA exclusion.
Executive branch covered individuals have access to APA-based procedural defaults and judicial review pathways that congressional covered individuals do not. Congressional employees face enforcement by committees that are not APA agencies, with no APA-based review mechanism.
Speech or Debate Clause barrier for congressional employees. Individuals challenging penalty enforcement by House or Senate Ethics Committees may encounter Article I, §6 Speech or Debate Clause barriers. Eastland v. U.S. Servicemen’s Fund, 421 U.S. 491 (1975); Gravel v. United States, 408 U.S. 606 (1972). Whether assessing civil fines under a generally applicable statute constitutes protected legislative activity is unsettled, but the barrier is real enough that congressional employees may have materially fewer judicial avenues to contest penalties than their executive branch counterparts.
Equal protection theory: Textual Finding: High | Litigation Risk: Low — United States v. Batchelder, 442 U.S. 114 (1979); Wayte v. United States, 470 U.S. 598 (1985); United States v. Armstrong, 517 U.S. 456 (1996). Mere inconsistency across offices without discriminatory intent is not sufficient.
Due process / fair notice theory: Textual Finding: Medium | Litigation Risk: Medium — viable if implementing rules are unclear or divergent enough to fail fair notice requirements. FCC v. Fox Television Stations, Inc., 567 U.S. 239 (2012); Grayned v. City of Rockford, 408 U.S. 104 (1972).
The Judicial Conference mismatch — confirmed drafting artifact
The bill assigns enforcement duties to the Judicial Conference via the imported §13101(18) definition. But the covered individual definition (§13151(1)(A)–(F)) lists only the President, Vice President, Members of Congress, House/Senate employees, political appointees, and executive/independent regulatory agency employees. Judicial officers and judicial employees are not among them.
The Judicial Conference appears because §13101 was imported wholesale from Chapter 131’s financial disclosure framework — where it has a covered population — without accounting for the fact that this bill’s covered population excludes the judiciary. As drafted, the Judicial Conference is assigned implementation obligations under §13154 with no covered individuals to regulate. This is dead code: the provision compiles but cannot execute.
Textual Finding: High — mismatch is unambiguous from §13151(1) and §13152 read against §13101(18).
Litigation Risk: Low — not a basis to invalidate the statute.
Structural Significance: High — judicial branch officials trading on MNPI in prediction markets are entirely outside the bill’s reach; the Judicial Conference is assigned unimplementable duties.
The MNPI standard — import from securities law into a CFTC context
The bill’s definition of MNPI (§13151(6)) adapts a securities law standard — information “that a reasonable investor would consider important” — to a prediction market context. The materiality standard traces to TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976) and Basic Inc. v. Levinson, 485 U.S. 224, 231–32 (1988); its contextual application confirmed in Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27 (2011).
Prediction market contracts are CFTC-regulated event contracts, not securities (§13151(9)(B)). The “reasonable investor” framing is securities-centric. What information is “important” to a prediction market participant in a given event contract is not specified, and the bill’s “in consultation with” CFTC structure (§13154(c)) does not guarantee definitional consistency across offices.
Textual Finding: Medium — the import creates interpretive ambiguity rather than a clear statutory conflict. Litigation Risk: Low — courts are generally comfortable applying “reasonable person/investor” standards across contexts. The practical vulnerability is inconsistent application rather than constitutional infirmity.
The political appointee cross-reference (§13151(8))
“Political appointee” is defined by cross-reference to 49 U.S.C. §106(f)(5) — a definition embedded in FAA Administrator authority provisions. (See also Abstraction Layer Analysis for the amendment drift risk this creates.) That definition covers: Executive Schedule positions (5 U.S.C. §§5312–5316), noncareer/limited SES appointees (5 U.S.C. §3132(a)(5)–(7)), and Schedule C employees (5 C.F.R. §213.3301).
The substantive coverage is mostly adequate, but edge gaps exist: some presidentially appointed Senate-confirmed positions not compensated under the Executive Schedule; certain Executive Office of the President roles under Title 3 staffing authorities; and agency bespoke personnel systems with “equivalent to SES” constructs that may not map cleanly to the SES definitions.
Textual Finding: Medium — coverage depends on how the cross-referenced definition is read against the full universe of executive branch appointments.
Litigation Risk: Low-Medium — constitutional challenge is weak; coverage disputes at the margins are plausible.
The family member coverage gap
The prohibition covers only named covered individuals. Spouses, adult children, and household members are entirely outside the bill’s reach. A covered official can provide MNPI through ordinary household conversation; the family member executes the contract; the profit flows back through shared finances. The entire prohibition is structurally circumvented without deception or concealment.
Chapter 131 of Title 5 — the same chapter this bill amends — already defines “dependent child” (§13101(2)) and “relative” (§13101(16), which explicitly includes husband and wife). Congress had the definitional toolkit inside the same chapter and did not invoke it. Whether by design or oversight, the omission has major structural consequences.
Existing indirect hooks are limited. 18 U.S.C. §208 imputes a spouse’s financial interests to the covered employee for purposes of restricting official participation in matters affecting those interests — but does not prohibit the spouse’s trading directly. Tipping/downstream liability theories analogous to Dirks and Salman may reach some conduct, but require extension from securities markets into prediction market contracts.
Textual Finding: High — gap is unambiguous from §13151(1) and §13152. Litigation
Risk: Low — under-inclusiveness does not ordinarily invalidate a statute; Congress may proceed incrementally.
Structural Significance: High — the primary evasion path is obvious, documented in the STOCK Act literature, and unaddressed.
Structural Analysis
This section asks how the system would actually behave in practice. Findings are rated on Textual Finding and Structural Significance.
Vague enforcement + platform-side incentive gap
Textual Finding: High | Structural Significance: High
The bill assigns enforcement to supervising ethics offices but grants no investigative authority. Ethics offices have no subpoena power over platforms, no access to trading records, and no authority to initiate investigations based on market anomalies. The enforcement mechanism exists only if a violation surfaces through a report or a tip.
This problem has two distinct dimensions. First, the enforcer has no detection tools — no radar gun. Second, the parties with the most detection capacity — the platforms — have no obligations under this bill. Platforms face no requirement to flag anomalous trading by known officials, no duty to cooperate with ethics office inquiries, and no domestic-representative liability hook. Platforms domiciled outside the United States are expressly within the prohibition’s scope and face zero enforcement exposure as platforms. The bill relies entirely on the regulated party to surface violations while the party best positioned to detect those violations has no role in the enforcement architecture.
Reporting/prohibition disconnect — the operational collapse point
Textual Finding: High | Structural Significance: High
The 30-day reporting requirement (§13155) is the bill’s most operational provision. It is also where the bill’s structural weakness is most concrete.
Three problems converge here. First, the reporting trigger is undefined: it activates when the covered individual “receives notification” of a transaction, but notification from whom — the platform, the broker, a confirmation email — is not specified. Platforms domiciled outside the US may send no standard notification at all.
Second, the bill does not address the relationship between timely reporting and liability. If an official self-reports a transaction within 30 days and that transaction is later found to have used MNPI, it is unspecified whether timely reporting constitutes any procedural safe harbor, or whether the §13154 determination process is triggered by the report itself. The disclosure regime and the prohibition operate in parallel without a defined interface.
Third, covered individuals who fail to report face no stated consequence independent of §13153’s penalty for the underlying violation. Non-reporting is therefore rational if the trade itself was based on MNPI — the only cost of non-reporting is the penalty already owed.
Perverse incentives
Textual Finding: High | Structural Significance: Medium
The penalty structure — double the profit, or $500 — creates a calculable risk/reward. For large positions, the penalty is proportionate but only applies if the violation is detected through a mechanism this bill does not create. Officials with access to the most valuable insider information also have the greatest ability to route trading through family members and the greatest resources to contest enforcement.
Accountability gaps — temporary/term appointment exclusion
Textual Finding: High | Structural Significance: Medium
House and Senate employees serving under “temporary or term appointments” are excluded from covered individual status (§13151(4)(B)). Congressional staffing structures increasingly rely on term appointments and detailed arrangements. The scope of this exclusion warrants examination against actual staffing patterns before this bill advances.
Sunset provisions
Textual Finding: High | Structural Significance: Medium
No review mechanism is provided. The question that most needs answering — whether enforcement outcomes improve on the STOCK Act’s thin prosecution record or replicate it — will not be formally surfaced without a review clause. Without that data, the structural failures documented in this brief cannot be corrected through the normal legislative process.
Second and Third-Order Effects
Second-order: the legitimization risk
If the bill passes with its current gaps intact, it may structurally legitimize prediction market participation by covered officials rather than constrain it. Congress will have created a compliance framework. Officials can point to adherence with the 30-day reporting requirement as evidence of good-faith behavior — even while exploiting the family member workaround, even while the prohibition itself is functionally unenforceable for lack of detection infrastructure.
A rules framework that is structurally incomplete does not function as a ceiling on conduct; it functions as a floor on optics. Passing an incomplete bill can make a more complete bill politically harder to achieve, because Congress will have already acted on the issue.
Third-order: reporting optimizes over prohibition
If the detection architecture remains unchanged — no platform obligations, no ethics office investigative authority, self-reporting as the sole trigger — officials will optimize for the reporting requirement, not the prohibition. The behavior being targeted will not change. The documentation of that behavior will become more orderly. The bill will have produced a disclosure database of compliant-looking activity while the conduct it was designed to address continues through adjacent channels.
Abstraction Layer Analysis
This section asks how well the bill separates policy goals from implementation specifics, and whether the interfaces between those layers are well-defined.
Definition import: “material nonpublic information”
The “reasonable investor” standard imports a securities law interpretive tradition into a commodity derivatives context where it has no established application. The CFTC and supervising ethics offices will need to define “reasonable investor” for prediction market contracts without guidance, or import doctrine not designed for it. The “in consultation with” structure does not guarantee consistency.
Textual Finding: Medium | Structural Significance: Medium
Notification trigger: assumes centralized broker model
The 30-day reporting clock (§13155) activates when the covered individual “receives notification” of a transaction. This assumes a centralized platform architecture — a registered intermediary that generates transaction confirmations in a standard format. Decentralized, crypto-native prediction market architectures (such as smart contract-based platforms) involve direct on-chain interaction with no intermediary and no notification event in the conventional sense. As these platforms grow, the notification trigger will have no mechanism by which to fire. The bill hardcodes an assumption about market architecture that is already being outpaced.
Textual Finding: High | Structural Significance: Medium-High
The political appointee cross-reference: amendment drift risk
Defining “political appointee” by cross-reference to 49 U.S.C. §106(f)(5) couples a government-wide ethics policy to an implementation detail in a transportation statute that can be amended for unrelated reasons. If Congress amends 49 U.S.C. §106(f)(5) for FAA governance purposes, it could inadvertently alter who is covered under this ethics prohibition. Policy goals should not be coupled to implementation details in a different statute that the ethics framework does not control.
Textual Finding: High | Structural Significance: Medium
The Judicial Conference assignment: dead code
The bill assigns §13154 implementation duties to the Judicial Conference over a population the bill does not cover. Those provisions are unimplementable as applied to the Judicial Conference. This signals that the bill was assembled from existing definitional frameworks without a full coverage audit against the actual covered population.
Textual Finding: High | Structural Significance: Medium (functional consequence already captured under Legal Impact Assessment)
The 180-day implementation gap
The prohibition in §13152 takes effect at enactment. Ethics offices have 180 days to establish implementing procedures (§13154). During that window, the prohibition exists but no penalty procedures do. Covered individuals who violate the prohibition in that interval may contest whether penalties can be assessed before implementing regulations are in place. The prohibition layer and the enforcement layer are not synchronized.
Textual Finding: High | Structural Significance: Medium
Definition of “profit”
§13153 defines the penalty as double the “profit made by the covered individual through the applicable covered transaction.” Profit is not defined. In prediction markets where officials may hedge — holding offsetting positions on the same event contract — it is unclear whether profit means the gross payout of the winning leg, the net of all related positions, or something else. Ambiguity here serves covered individuals, not enforcement.
Textual Finding: High | Structural Significance: Medium
Platform-agnostic definition: clean
The definition of “prediction market contract” includes platforms “regardless of whether the platform is domiciled in the United States” (§13151(9)(A)) and references the Commodity Exchange Act (7 U.S.C. 7a-2(c)(5)(C)(i)) rather than listing specific platforms. This does not hardcode jurisdiction or platform identity in ways that would require amendment as markets evolve. This section is architecturally sound.
Textual Finding: High | Structural Significance: High (positive finding — absence of collapse is itself a data point)
Recommendations
Close the family member loophole. Chapter 131 already defines “relative” to include spouses (5 U.S.C. §13101(16)) and “dependent child” (§13101(2)). Amend §13151(1) to incorporate those definitions directly.
Fix the Judicial Conference mismatch. Either remove the Judicial Conference from the imported supervising ethics office definition as applied to this subchapter, or add judicial officers and judicial employees to the covered individual definition with appropriate tailoring.
Designate CFTC as the primary standard-setter. Replace “in consultation with” CFTC with a structure that designates CFTC as the standard-setter for prediction market contract definitions and materiality standards. Ethics offices are equipped to enforce against covered individuals; they are not equipped to define materiality standards for commodity derivatives markets.
Synchronize prohibition and implementation timelines. Either delay the prohibition’s effective date by 180 days to match implementation, or explicitly state that penalties apply from enactment regardless of whether implementing procedures exist.
Add detection infrastructure — both sides. Authorize ethics offices to request trading records from platforms for covered individuals. Separately, require platforms with US-based operations or registered agents to maintain records of covered individual trading activity and produce them on request. Without obligations on both the enforcer and the platform, the detection gap cannot be closed.
Add an expedited audit trigger. Establish a mechanism allowing ethics offices to initiate review within 48 hours when a reported or flagged covered transaction precedes a known policy announcement or regulatory action by less than a defined interval. The 30-day self-reporting window is too slow to detect the highest-risk trades.
Establish uniform minimum standards. OGE should be designated to issue uniform minimum standards that all supervising ethics offices must meet — floor rules, common definitions, shared penalty calculation methodology — to reduce due process and fair notice exposure.
Replace the political appointee cross-reference. Define “political appointee” directly in §13151(8) using the same three pillars already in 49 U.S.C. §106(f)(5) — Executive Schedule, noncareer/limited SES, Schedule C — stated within Title 5 itself, without the amendment drift risk of cross-referencing a transportation statute.
Define “profit” explicitly. Net profit after transaction fees and cost basis, net of all related positions in the same event contract, calculated at position exit or at the date of the final required report, whichever is earlier.
Add a sunset or review clause. Require a formal GAO or OGE review of enforcement outcomes no later than three years after enactment. The structural failures documented in this brief cannot be corrected through the normal legislative process without data on whether the bill is achieving its stated purpose.
What this bill gets right
The bipartisan sponsorship matters structurally. Slotkin (D-MI), Young (R-IN), Schiff (D-CA), Curtis (R-UT) is a genuine cross-aisle coalition on a structural accountability question, not a messaging exercise. The bill correctly identifies prediction markets as a new vector for the existing insider trading problem — recent prediction market cycles demonstrated that officials’ positions create information asymmetries that are valuable on these platforms in ways that weren’t true five years ago. The platform-agnostic definition is genuinely well-constructed and will not require amendment as markets evolve internationally. The underlying legal framework — adapting MNPI standards rather than inventing new doctrine — is the right architectural starting point.
These are correctable defects.
Brief produced by Church Bells / The Statecraft Blueprint. Primary source: bill text WAL26165 D7M S.L.C. (119th Congress, 2d Session) accessed Mon Apr 06 2026