Will Congress Kill Polymarket and Kalshi? What the Data Says About a 2027 Crackdown
Prediction markets went from a nerdy curiosity to a $20-billion-a-month industry in under two years. That kind of growth catches attention — and not the good kind.
Right now, at least seven bills are sitting in Congress targeting platforms like Polymarket and Kalshi. Most of them have bipartisan support. And the political math is shifting fast: Democrats are polling at an 85% likelihood of retaking the House in 2026 midterms, according to — ironically — Polymarket itself.
So the question isn’t whether regulation is coming. It’s how bad it’ll be.
The Numbers That Scared Washington
Think of prediction markets like a weather forecast that got too accurate for comfort. People bet on everything from election outcomes to baseball games. But the bets that really spooked lawmakers were the ones on war.
Remember those phantom bettors who seemed to know about military operations before the first shots were fired? Yeah. That’s not just morally questionable — it’s potentially a national security risk. When someone can profit from knowing a government action before the public does, you’ve basically created a stock market for insider information.
The monthly volume numbers tell the story: $1.2 billion at the start of 2025. Over $20 billion by early 2026. That’s a 16x jump in about a year. For context, the entire US options market took decades to reach that kind of growth curve.
The Bills You Need to Know About
There are a lot of proposals floating around, but three stand out:
The STOP Corrupt Bets Act — Introduced by Senator Jeff Merkley and Representative Jamie Raskin, both Democrats. This one is the broadest. It would ban betting on elections, most government actions, sports, and military operations. Basically the nuclear option for prediction markets.
The Public Integrity in Financial Prediction Markets Act — This one’s bipartisan, which makes it more dangerous. Four senators (including two Republicans) want to ban government officials from betting on anything they have inside knowledge of. That covers the president, cabinet members, and Congress itself.
The Prediction Markets Are Gambling Act — Introduced by Senators Adam Schiff and John Curtis, this one reclassifies prediction markets as gambling, which would hand regulatory power to individual states. That’s death by a thousand cuts — 50 different state regulators means 50 different sets of rules.
Why This Matters Beyond Crypto
Here’s what most people miss: prediction markets aren’t really about crypto. They’re about information. When Polymarket processes $20 billion a month, what it’s actually doing is aggregating the collective intelligence of millions of bettors into real-time probabilities.
That’s valuable. And that’s exactly why governments hate it. A platform that can predict wars, elections, and policy changes better than government agencies themselves is a threat — not because it’s wrong, but because it’s right.
The smart play here? If you’re using prediction markets, understand that the regulatory window is closing. The bipartisan support for restrictions means this isn’t a partisan issue — it’s a power issue. And governments don’t tend to lose power voluntarily.
What You Can Do Right Now
If you use Polymarket or Kalshi: Start thinking about what happens if your state suddenly classifies event contracts as gambling. Your funds could face restrictions.
If you’re in crypto more broadly: This is a signal that the regulatory wave is expanding. Prediction markets were one of the last unregulated corners. When Congress moves on them, it’ll move on other areas too.
If you just follow the news: Watch the 2026 midterms closely. If Democrats take the House, these bills get a real shot at passing in 2027. Polymarket’s own odds suggest that’s the likely outcome.
In my view, the prediction market era isn’t ending — it’s entering a new phase. The question is whether platforms like Polymarket can adapt fast enough to survive the regulatory onslaught. History suggests they can. But history also suggests it’ll be painful.
The genie is out of the bottle. People want to bet on real-world events. The question is whether they’ll do it on regulated platforms or on VPNs. Congress hasn’t figured that part out yet.
