U.S. lawmakers on Tuesday (March 17) rolled out new legislation aimed at shutting down certain prediction markets that allow people to wager on geopolitical developments, government decisions, and other real-world events.
Sen. Chris Murphy and Rep. Greg Casar introduced what they call the Banning Event Trading on Sensitive Operations and Federal Functions Act, or the BETS OFF Act. Their proposal would block betting platforms from offering contracts tied to government actions or situations where insiders might already know, or directly influence the outcome.
Murphy argued that these markets create dangerous incentives and open the door to abuse by people with privileged information.
“These are fundamentally corrupt markets. They are rife with insider trading, and they offer incredibly perverse incentives, especially inside the government,” Murphy said at a press conference introducing the bill.
If passed, the legislation would limit prediction market platforms such as Polymarket and Kalshi from listing bets related to official government decisions or events controlled by specific individuals.
Lawmakers announce BETS OFF Act amid concerns about insider information and war betting
Murphy pointed to a recent burst of betting activity surrounding U.S. military action against Iran as a major reason lawmakers decided to act now.
According to the senator, prediction markets saw unusually large wagers placed just a day before the United States carried out strikes against Iran.
“There was a series of very specific bets that were made… on the United States attacking Iran the following day,” Murphy said. “Those bets paid off to the tune of over $100,000 at a minimum for each of the individuals who placed those bets.”
Murphy said many of the accounts responsible for the wagers were created the same day the bets were placed, raising concerns that someone with advance knowledge of the attack may have used the markets.
“It seems pretty clear what happened. People inside the White House, or very close to the White House, with knowledge of the attack that was imminent, cashed in,” he said.
Casar echoed those concerns, arguing that prediction markets could allow people close to sensitive decisions, including military operations to profit from them.
“We shouldn’t live in a country where someone sitting in the Situation Room… could have hundreds of thousands of dollars riding on the decision,” Casar said.
Casar said roughly 150 accounts placed unusual wagers predicting the war would begin the next day. Of those, he claimed 109 accounts bet more than $10,000 and 16 reportedly earned more than $100,000. One bettor allegedly walked away with nearly $500,000.
The BETS OFF Act would prohibit betting markets tied to terrorism, assassination, war, and official government actions. It would also bar contracts involving events where a single person controls the outcome or where insiders could reasonably know the result before the public.
Lawmakers also cited other examples they consider problematic, including bets on which words a politician might use in a speech, predictions about Super Bowl halftime performers, or wagers on announcements that insiders already know in advance.
In one case, bettors on Polymarket allegedly sent death threats to Israeli journalist Emanuel Fabian after his reporting about an Iranian missile strike affected a high-stakes betting contract. Fabian said routine war coverage triggered “days of harassment and death threats” after gamblers demanded he change the report to influence the market outcome.
Murphy argued those kinds of markets mislead users into believing the bets are fair.
“Gullible consumers get conned into placing bets on markets where the outcome is knowable, where they are essentially bound to lose,” he said.
Prediction markets have expanded exponentially and attracted growing regulatory scrutiny. Supporters say the platforms can produce useful forecasts by aggregating public information, while critics warn they create opportunities for manipulation.
Murphy said the new proposal is part of a wider push in Washington to rein in betting tied to sensitive real-world events.
“When the market is inherently and almost certainly rigged, that should be a place where people are protected from what is… pretty regularly outright fraud,” he said.
Featured image: Senator Chris Murphy via YouTube
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