STOP Corrupt Bets Act: The Federal Bill That Would Ban Sports, Election, and War Contracts on Kalshi and Polymarket

The federal government's biggest swing yet at prediction markets has a number now. The STOP Corrupt Bets Act — formally titled the Stop Trading On Predictions and Corrupt Bets Act of 2026 — was introduced by Senator Jeff Merkley (D-OR) as S. 4226 in the Senate, with a companion bill led by Representative Jamie Raskin (D-MD) in the House. If enacted, it would amend the Commodity Exchange Act to prohibit a wide swath of event contracts on every CFTC-regulated prediction market in the country, including Kalshi and the US-regulated arm of Polymarket.

The bill was introduced March 26, 2026 and re-surfaced in industry coverage this week as the federal-state regulatory fight intensifies. Minnesota became the first state to criminalize prediction market operation on May 18. The CFTC sued Minnesota the next day. Kalshi sued Minnesota on May 28. President Trump posted a Truth Social broadside on May 26 calling state officials trying to regulate prediction markets "SCUM" and demanding the CFTC retain "exclusive authority." Industry traders, who have built habits around betting on Stanley Cup games, congressional vote outcomes, and oil prices, now have a federal bill text staring back at them that would shut most of those contracts down.

Here is what S. 4226 actually does, who is backing it, what would change for Kalshi and Polymarket users if it passes, and where it slots into a regulatory war that is now being fought in at least six states and the White House at the same time.

What the STOP Corrupt Bets Act Prohibits

The bill targets specific categories of event contracts, treating them as forms of unregulated gambling rather than legitimate commodity derivatives. According to the bill text on file at Congress.gov and the joint announcement from Senator Merkley and Representative Raskin, prohibited categories include:

• Athletic events and games of skill — NFL, NBA, NHL, MLB, college sports, tennis, golf, soccer, esports, individual player props
• Card and dice games — poker tournament outcomes, casino-style products
• Federal, state, and local elections — presidential, congressional, gubernatorial, ballot initiatives
• Outcomes of government actions — congressional votes, executive orders, regulatory decisions
• War and military actions — US or foreign military strikes, troop deployments, war declarations
• Natural disasters — earthquakes, hurricanes, wildfires (with carve-outs for legitimate weather hedging by farmers)
• Legal proceedings — verdicts, settlements, sentencing outcomes
• Deaths and assassinations — a category that drew particular attention after a US soldier was indicted in April 2026 for using classified information to bet on the capture of Venezuelan leader Nicolás Maduro
• Popular culture events — award shows, Oscars, Grammys, Emmys
• Whether a person makes a particular statement — markets like Kalshi's "What words will Karoline Leavitt say in the next press briefing?" that lawmakers cite as having "no possible economic value or hedging need"

The bill explicitly clarifies that Congress's original intent under the Commodity Exchange Act of 1936 was to enable commercial hedging — farmers locking in crop prices, airlines hedging fuel — not retail wagering on whether a president gets impeached. It directs the CFTC to enforce that interpretation and instructs the agency to prevent any contract that lacks a "valid economic hedging interest" from being listed. It also calls on the Government Accountability Office to study insider trading, the effects of prediction markets on children, and offshore platforms used to evade US enforcement.

Notably, the bill does not preempt state-regulated gambling, including traditional sports betting at licensed sportsbooks. The carve-out is deliberate: lawmakers want to draw a hard line between state-licensed gambling, which operates under existing consumer protection regimes, and federally regulated event contracts, which they argue have slipped through the regulatory cracks.

Sponsors, Cosponsors, and the Political Coalition

Senator Merkley is the lead Senate sponsor. The bill's Senate cosponsors as of introduction are Elizabeth Warren (D-MA), Richard Blumenthal (D-CT), Chris Van Hollen (D-MD), and Sheldon Whitehouse (D-RI). Representative Raskin leads the House companion bill.

The coalition outside Congress includes Public Citizen, Americans for Financial Reform, Citizens for Responsibility and Ethics in Washington (CREW), the Project on Government Oversight (POGO), and Democracy Defenders Action. Public Citizen's Craig Holman said in the joint announcement that "the prediction market industry has become nothing more than a gambling business by any other name," citing well-timed bets on geopolitical events as evidence of insider activity. POGO's Janice Luong framed it as an oversight matter, arguing "allowing bets on political events, government actions, and military matters undermines public trust and invites corruption."

Raskin's framing in the announcement was sharper. "The oligarchs and opportunists are using prediction markets like Kalshi and Polymarket to enrich themselves," he said. "By banning bets on elections, legislation, acts of war and other government actions, we can oppose corrupt attempts to rig our democracy and profit from the fix."

The bill arrives in a Congress where prediction market regulation has become an unusually crowded legislative space. At least six other related bills are circulating, including the bipartisan PREDICT Act from Representatives Adrian Smith (R-NE) and Nikki Budzinski (D-IL) banning members of Congress and senior executive branch officials from trading; a Schiff (D-CA)/Curtis (R-UT) bill called the Prediction Markets Are Gambling Act that would block CFTC-regulated platforms from offering sports event contracts; and the Bets Off Act from Senator Chris Murphy (D-CT) and Representative Greg Casar (D-TX). The Senate already passed an internal rule on April 30, 2026 banning senators and their staffs from trading on prediction markets entirely.

How the Bill Collides With Current Federal Law and the Trump Position

This is where the bill's path gets complicated. The Commodity Futures Trading Commission, under chair Michael Selig — appointed by President Trump and confirmed in December 2025 — has taken the position that the agency holds exclusive jurisdiction over event contracts traded on designated contract markets like Kalshi. Selig's CFTC has actively filed lawsuits against states that have moved to restrict prediction markets, including Arizona, Connecticut, Illinois, New York, Wisconsin, and most recently Minnesota.

President Trump weighed in directly on May 26, 2026 in a Truth Social post. "It is critically important that the CFTC's exclusive authority over Prediction Markets is maintained, and that they will thrive," Trump wrote. "Under my leadership, we are setting 'rules of the road' that are the Gold Standard for the States. We cannot have SCUM like Chris Christie, Letitia James, Tim Walz, and JB Pritzker setting the rules!" He praised Selig by name as "respected by all" and framed prediction markets as a strategic financial-innovation priority on par with cryptocurrency. The president's son, Donald Trump Jr., is a paid strategic advisor to Kalshi and an investor in Polymarket through his venture firm 1789 Capital.

The STOP Corrupt Bets Act runs directly against that posture. If it advanced, it would force the administration to either sign a bill banning the bulk of its own preferred regulatory framework's product offering, or veto a measure with bipartisan backing in some adjacent categories (sports event contract bans like Schiff/Curtis have Republican support). It would also redirect federal enforcement from defending Kalshi against state suits to enforcing federal prohibitions against Kalshi directly.

The state lawsuits add additional complexity. Kalshi has secured preliminary injunctions blocking enforcement in New Jersey and Arizona on Supremacy Clause grounds, arguing that the Commodity Exchange Act gives the CFTC exclusive jurisdiction and that state gambling laws cannot override federal preemption. Minnesota is the third state where Kalshi is litigating, with the CFTC running a parallel suit. If S. 4226 passes, the preemption argument that has so far worked for Kalshi at the federal-state level would shift: the prohibition would be federal, not state, and the question of whether event contracts count as commodities would be answered by Congress rather than left to the courts.

What Changes for Kalshi and Polymarket Users If the Bill Passes

For users currently holding contracts on Kalshi or Polymarket's US-regulated venue (QCX LLC d/b/a Polymarket US), passage of S. 4226 would force significant changes to what they can trade. Sports event contracts — currently the fastest-growing segment for both platforms — would be eliminated from US-registered exchanges. Election markets, which Kalshi spent two years and a federal lawsuit fighting to launch in 2024, would be banned. War, military action, government action, and legal proceeding markets would all be off the table.

What would remain: commercial hedging products with demonstrable economic value. Weather contracts used by farmers to hedge crop losses survived even Minnesota's broad state ban after agricultural lobbying. Commodity-linked contracts on inflation, interest rates, and economic indicators would likely remain under the CEA's traditional scope. The carve-out for "valid economic hedging interest" is the central legal mechanism by which the bill draws its line.

The Trump administration's posture and Don Jr.'s industry ties make a clean path to passage difficult to envision. But the legislative pressure is real: at least 20 federal suits have been filed against prediction market platforms for products that conflict with state law, and the political class is reading the same insider-trading headlines as everyone else.

Market Reaction and Odds

Polymarket lists active markets on whether new prediction market regulation will be enacted in 2026, though none specifically pegged to S. 4226's odds of passage. The platform itself does not currently host a high-volume market on whether the STOP Corrupt Bets Act will be signed into law. On comparable legislative bills tracked on Polymarket in early June 2026 — including the Clarity Act trading near 55¢ for "Yes" by year end and the SAVE Act trading near 8¢ — the market has shown a clear pattern of pricing partisan-line legislation with a divided Congress as unlikely to clear within a single session.

Kalshi has not, as of publication, listed a market on the STOP Corrupt Bets Act's enactment. Bernstein analysts have forecast that prediction market volumes could reach $1 trillion annually by 2030 if the regulatory environment remains permissive — a forecast that S. 4226's passage would directly undercut. Kalshi and Polymarket are currently valued at approximately $22 billion and $9 billion respectively.

The most direct equity-market exposure to a bill like S. 4226 runs through Robinhood (NASDAQ: HOOD), which integrates Kalshi event contracts directly into its app. Robinhood's stock has moved on prediction-market regulatory news several times in 2026.

What Happens Next

S. 4226 has been referred to the Senate Committee on Agriculture, Nutrition, and Forestry, which has jurisdiction over the CFTC and the Commodity Exchange Act. The House companion bill from Representative Raskin will follow a similar path through the House Agriculture Committee. Committee markups, hearings, and the question of whether either chamber's leadership prioritizes the bill for floor action will determine its near-term trajectory.

Several precedents are worth tracking. The 2010-era Cantor Fitzgerald Hollywood Stock Exchange effort, which sought to allow box-office event contracts, was killed by a congressional amendment to the Dodd-Frank Act after motion picture industry lobbying. The 2024 Kalshi v. CFTC litigation over election markets ultimately turned on whether elections are "gaming" under the CEA — a question S. 4226 would resolve by congressional fiat. The current crop of bills, including STOP Corrupt Bets, PREDICT, Prediction Markets Are Gambling, and Bets Off, are unusual in that they're being introduced into a Trump administration explicitly hostile to state regulation but ambivalent on federal restrictions — leaving Congress as the variable.

The intermediate-term watch list includes:

• Minnesota federal court ruling on the CFTC and Kalshi preliminary injunction motions before August 1, when SF 3432 takes effect
• Senate Agriculture Committee action on S. 4226 (hearings vs. dormant)
• CFTC final rulemaking on event contracts — Chairman Selig has signaled a comprehensive rule grounded in "rational and coherent interpretation of the Commodity Exchange Act"
• House Oversight Committee investigation into government employee trading on prediction markets, opened in May 2026
• 2026 midterm elections — the first full election cycle with election event contracts available on Kalshi nationally, which will sharpen the political case both for and against expansion

For now, every retail user with money on Kalshi or Polymarket is essentially trading inside a regulatory question whose answer Congress is actively writing.

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Sources & Verification

• STOP Corrupt Bets Act bill text — S. 4226, 119th Congress (2025-2026) — Congress.gov
• New Merkley, Raskin Legislation Bans Gambling on Elections, Sports, War and Government Activity — Office of Senator Jeff Merkley, March 26, 2026
• Raskin, Merkley Legislation Would Ban Prediction Market Gambling on Sports, Elections, War, and Government Actions — Office of Representative Jamie Raskin, March 26, 2026
• Exclusive: New Senate bill would ban prediction markets on sports, elections, war — Axios, March 26, 2026
• Prediction market bets on sports, election, war would be verboten under new Democratic bill — CNBC, March 26, 2026
• STOP Corrupt Bets Act Explained — Federal Bill Would Ban Kalshi, Polymarket Sports Contracts and Other Prediction Market Wagers — Bettors Insider, June 2, 2026
• 'SCUM': Trump enters prediction market fight with swing at state officials — Politico, May 26, 2026
• Trump praises prediction markets, defends CFTC as court cases compound — CoinDesk, May 26, 2026
• Kalshi sues State of Minnesota over prediction market ban — FOX 9, May 28, 2026
• Kalshi Joins CFTC In Suing Minnesota Over Prediction Markets Criminalization — Benzinga, May 29, 2026
• The Political Backlash to Prediction Markets Has Arrived — Front Office Sports, March 27, 2026
• Prediction Market Legislation Continues to Evolve as Congress and Regulators Engage — Venable LLP, March 31, 2026
• U.S. senators ban themselves from prediction markets trading — CNBC, April 30, 2026
• Analysis: What are prediction markets and why is the Trump administration on board? — CNN, May 15, 2026