Congress Stock Trading Ban: What Prediction Markets Say

The Gap: 86% Public Support, 12-20% Market Odds

The congressional stock trading ban is one of the most striking examples of the gap between public demand and legislative probability in American politics right now. The numbers are stark:

The Bills: What Is Actually Being Proposed

Multiple competing bills in 2026 have fractured what could have been a unified coalition. Understanding the differences between them explains why the odds remain low despite the apparent momentum.

Why It Keeps Failing: The Structural Explanation

The Personal Incentive Problem

95% of Congress members own stock. 59% of stock-owning members are Republican, 41% Democrat. The people voting on the ban are the people the ban would affect. This is not a partisan problem - it is a structural one. Any member who trades actively has a direct financial incentive to slow, weaken, or kill reform.

During the 2025 government shutdown, members of Congress made nearly 200 trades representing $3-9 million in assets while their constituents faced missed paychecks and drained SNAP benefits. The STOCK Act passed in 2012 was supposed to address this. More than 25 members violated even its disclosure requirements in 2025.

The Scope Fragmentation Problem

Every time a stock trading ban gains momentum, it fragments along two fault lines:

• Scope: Should the ban cover only Congress, or also the president and executive branch? Democrats want both. Republicans prefer Congress-only. This difference has killed multiple bipartisan deals.

• Strength: Should new purchases be banned, or should all holdings be divested? The Republican-backed Steil bill focuses on new purchases. The Restore Trust Act requires divestment of existing holdings. Democrats consider the Steil approach inadequate.

These two axes create four distinct bill variants, each with its own coalition. When multiple bills compete for the same sponsor pool, none reaches the threshold for a floor vote.

The Midterm Election Calendar

Luna's discharge petition had 82 of 218 needed signers as of late March 2026, and 'the group's united front began to crumble with this year's midterm elections closing in' (Roll Call). As November 2026 approaches, members who might have supported the bill in a non-election year revert to caution. Supporting a stock ban means publicly acknowledging that the current system is broken - a harder vote to cast when your opponent can use it against you.

The Insider Trading on Prediction Markets: A Parallel Track

The stock trading ban debate has merged with a separate and newer controversy: whether government officials are trading on prediction markets using insider knowledge. This parallel track has its own bills, its own market, and its own probability - and it may actually be more likely to pass than the stock ban.

The Maduro Bet That Started It

In January 2026, a Polymarket account placed $32,500 in bets on Venezuelan President Maduro's ouster, profiting over $400,000 within 24 hours after US forces captured him - a return of over 1,200%. The account made only four predictions, all related to US intervention in Venezuela. The market began rising hours before Trump's announcement.

This incident - following similar concerns about Iran war markets - triggered a cascade of legislative responses in Q1 2026. Rep. Torres' Public Integrity in Financial Prediction Markets Act, Sen. Murphy's war-betting ban, and the Schiff-Curtis bill targeting casino-style prediction market contracts all followed within weeks.

Why the Prediction Market Ban May Move Faster

The prediction market insider trading bills have one structural advantage over the stock ban: most members of Congress do not trade on prediction markets. The personal incentive to kill the bill is lower. At the same time, the public outrage over the Maduro and Iran bets gave it political urgency in early 2026 that the stock ban - a slower-burning issue - lacks.

Kalshi CEO Tarek Mansour publicly supported the Torres bill, framing it as distinguishing regulated US platforms from unregulated offshore ones. Both Kalshi and Polymarket announced new insider trading guardrails in March 2026 alongside the legislative push - a self-regulatory move designed to pre-empt the strongest versions of the proposed legislation.

What the Markets Are Actually Pricing

The most important distinction: regulatory action (CFTC) is priced at 20% while legislative action (Congress) is priced at 12%. This gap reflects the market correctly pricing that administrative rulemaking by an existing regulator is faster and faces fewer veto points than passing legislation. The CFTC has existing authority to address insider trading on the prediction markets it regulates. New legislation is not required for the CFTC to act.

Historical Context: Every Time This Has Been Attempted

The Information Edge: What to Watch Before Trading

Several specific, trackable events will reprice these markets between now and December 2026. Monitoring them provides information advantage over participants anchored to current polling:

• The discharge petition count. It needs 218 signatures. At 82 as of March 2026, it is more than halfway - but the rate of new signers is slowing as midterms approach. If it crosses 150+ signatures by June, the probability of a floor vote increases substantially. If it stalls below 100, the market should move toward lower passage odds.

• Floor vote scheduling. GOP leadership promised Rep. Luna a floor vote in Q1 2026 (since passed without one). Any new leadership commitment to a specific vote date is a strong signal. Any leadership silence after Q1 passes is a negative signal.

• CFTC regulatory action. The CFTC does not require Congressional action to issue new insider trading rules for prediction markets. A CFTC rulemaking announcement would resolve the 20% market and likely occur independently of the stock ban legislation.

• Trump's public position. The Trump family has direct financial interest in prediction markets (Truth Predict). Any public Trump statement on the stock ban or prediction market regulation moves these markets immediately.

• Senate majority leader scheduling. Senate Majority Leader Thune controls the Senate floor calendar. If he schedules the Gillibrand-Moody bill for a vote, odds increase. If no scheduling occurs by September, the midterm calendar effectively kills 2026 passage.

The DuelDuck Opportunity: Policy Prediction Duels

Policy passage markets are among the most underserved in prediction markets. Kalshi and Polymarket list major macro events (Fed decisions, election outcomes) but rarely cover specific legislative bill passage with community-level specificity. DuelDuck creators with policy expertise or Washington tracking experience have genuine information advantages in this space.

Conclusion: Public Support Is Not Legislative Probability

86% of the public wants this. 126 House members co-sponsored a bill. The Senate has bipartisan legislation. A committee vote passed. And yet prediction markets price passage at 12-20%.

This gap is not a market failure. It is a market correctly pricing the historical pattern of congressional self-regulation: consistent demand from the public, consistent co-sponsorship from members who know they cannot be stopped from signing onto bills that will never pass, and consistent death at the floor vote stage where personal financial incentives override public opinion.

The faster-moving track is CFTC regulatory action on prediction market insider trading - priced at 20% and requiring no new legislation. The Iran and Maduro insider trading scandals gave the CFTC political cover to act unilaterally. Watch for rulemaking announcements, not just congressional votes.

The stock trading ban is a market where public support does not predict passage. The prediction market is correct. The polls are not the right signal here.

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