US lawmakers target prediction markets over war bets

US lawmakers have introduced a bill to restrict prediction market betting on sensitive events such as war, following concerns over trades linked to the Iran conflict.

The proposed Banning Event Trading on Sensitive Operations and Federal Functions (BETS OFF) Act was introduced by Representative Greg Casar and Senator Chris Murphy after unusual bets surfaced on platforms like Polymarket.

“We shouldn’t live in a country where someone sitting in the situation room… could be driven by the fact that they have hundreds of thousands of dollars riding on the decision,”

Said Representative Greg Casar.

Lawmakers said the move was prompted by concerns that individuals with potential insider knowledge may have placed trades anticipating US military action against Iran.

The legislation follows a separate proposal, the DEATH BETS Act, aimed at banning contracts related to war, terrorism, assassinations and deaths on prediction platforms.

Prediction markets such as Polymarket and Kalshi allow users to trade on real-world outcomes, including geopolitical and political developments, raising regulatory and ethical concerns.

Despite the scrutiny, Polymarket continues to offer contracts tied to the Iran conflict, including potential military actions and leadership changes, while defending the value of market-based forecasting.

The bill marks another step in growing US regulatory pressure on prediction markets, particularly around the use of sensitive or potentially exploitable information.