Democratic lawmakers in the United States are introducing legislation aimed at preventing government officials from manipulating prediction markets by placing bets on events they have insider knowledge of, such as military actions. The Banning Event Trading on Sensitive Operations and Federal Functions (BETS OFF) Act would outlaw corrupt wagers on matters including government action, terrorism, war, assassination, and other events where the bettor possesses non-public information.
The bill is backed by Senator Chris Murphy (D-CT), a member of the Senate Foreign Relations Committee, and Representative Greg Casar (D-TX), a member of the House Committee on Oversight and Government Reform. The lawmakers cited reports of prediction market accounts placing significant bets prior to U.S. operations in Venezuela and Iran as motivation for the legislation.
The bill's text defines "specified events" broadly, including "any event … the outcome of which is under the complete control of any person; or the outcome of which is known by any person in advance." This extends beyond government actions to include events like surprise performers at the Super Bowl halftime show or award show winners.
While the bill faces an uphill battle in the current Republican-controlled Congress, its proponents note that prediction markets themselves indicate a potential shift in power after the midterm elections, which could give Democrats control of key congressional committees and advance the legislation.
The move comes amid a surge in prediction market activity, driven in part by geopolitical tensions. Platforms like Polymarket and Kalshi reported record trading volumes of $2.49 billion and $2.85 billion, respectively, last week. Total volume across all prediction markets has climbed to over $145 billion with 2.8 million unique users, according to data from Dune.
This legislative push is part of a broader trend. In January, Representative Ritchie Torres (D-NY) introduced a similar bill targeting insider trading after suspicious bets on Venezuela actions. Last week, Senator Adam Schiff (D-CA) introduced a bill to ban prediction market contracts tied to war, terror, assassinations, or death outright, while Senator Richard Blumenthal (D-CT) introduced his own bill targeting insider trading and market manipulation.
The regulatory oversight of these platforms falls to the U.S. Commodity Futures Trading Commission (CFTC). The issue of insider trading was highlighted recently when Kalshi suspended and fined two users, including a political candidate who bet on his own gubernatorial race.
