Democrats Push Bill to Ban Insider Betting on Prediction Markets

Congressional Democrats introduced legislation on Tuesday aimed at criminalizing insider trading on prediction markets, responding to reports that accounts placed suspiciously timed bets ahead of U.S. military operations in Venezuela and Iran.

The Banning Event Trading on Sensitive Operations and Federal Functions (BETS OFF) Act, sponsored by Senator Chris Murphy of Connecticut and Representative Greg Casar of Texas, would prohibit individuals from placing wagers on prediction market platforms when they possess advance knowledge of outcomes. The bill covers a broad range of events — from government military actions, terrorism, and assassinations to outcomes controlled by insiders, such as surprise performers at the Super Bowl halftime show or award show winners.

The legislation arrives amid growing bipartisan concern about the integrity of prediction markets, which have surged in popularity since platforms like Kalshi and Polymarket gained mainstream attention during recent election cycles. Kalshi itself recently suspended and fined two users for manipulative trading, including a California gubernatorial candidate who bet on the outcome of his own race. The bill would also direct the Commodity Futures Trading Commission to stop listing contracts tied to war, terrorism, assassinations, or death — a provision that aligns with a separate measure introduced last week by Senator Adam Schiff of California.

The BETS OFF Act is the latest in a flurry of Democratic proposals targeting the prediction market space. In January, Representative Ritchie Torres of New York introduced similar legislation with dozens of co-sponsors after suspicious betting patterns emerged around the Venezuela operations. Senator Richard Blumenthal of Connecticut has also put forward his own bill focused on insider trading and market manipulation. CFTC Chairman Mike Selig, appointed by President Donald Trump, has publicly championed prediction markets as a corrective to flawed polling and media narratives, making aggressive regulatory action from the commission unlikely in the near term.

With Republicans controlling both chambers of Congress, the bill faces steep odds of advancing in its current form. However, its sponsors appear to be laying groundwork for a potential shift in power. Prediction markets themselves — the very platforms the legislation targets — currently suggest Democrats are favored to reclaim the House in the midterm elections, and possibly the Senate. Should that scenario materialize, Murphy and Casar would be well positioned to push the measure through committee hearings and toward a floor vote.