U.S. lawmakers have taken a major step toward restricting the rapidly evolving prediction market sector with the introduction of the Banning Event Trading on Sensitive Operations and Federal Functions (BETS OFF) Act. The bicameral bill, introduced by Senator Chris Murphy (D‑Conn.) and Representative Greg Casar (D‑Texas), would prohibit prediction market wagers tied to government actions, national security matters, terrorism, assassination and other sensitive events where insiders could have advance knowledge of outcomes.
The proposal comes amid increasing scrutiny of platforms like Polymarket and Kalshi, which have drawn controversy for permitting wagers on geopolitically sensitive topics and events linked to human life and national security. Lawmakers and critics argue that the current framework creates ethical risks, incentives for manipulation and avenues for insider trading that challenge both regulation and public trust.
What the BETS OFF Act Would Prohibit
The bill, dubbed the BETS OFF Act, targets a specific subset of event contracts that are proliferating on online prediction markets, particularly where the outcome is either known in advance or subject to manipulation by a single individual or small group.
Under the proposed legislation:
- All prediction market wagers on government actions and public policy decisions would be banned
- Bets tied to war, terrorism, assassination or national security events would be prohibited
- Any events where a participant can reasonably know or control the outcome in advance, such as scripted entertainment outcomes or predetermined political actions, would also be barred
- Operators facilitating these markets could face criminal penalties if they promote or manage prohibited betting activities in the United States
Murphy and Casar framed the bill as a necessary response to concerns over manipulation and a rising number of well‑timed wagers known to be placed shortly before major military developments, including alleged insider activity preceding U.S. strikes in the Middle East.
Legislative Rationale and Broader Concerns
Lawmakers backing the BETS OFF Act contend that prediction markets, which allow participants to trade contracts on event outcomes, have outpaced existing gambling and financial regulations. They argue that contracts tied to matters of national security or events with predetermined outcomes undermine ethical norms and invite abuse.
Senator Murphy, speaking at a press briefing, said the bill would curb incentives for insiders to profit from privileged information rather than sound policy. He described prediction markets on sensitive events as “inherently rigged” when participants have access to non‑public insights.
When events that involve good and evil, life and death become just another financial product, morality no longer matters and the soul of America is fundamentally corrupted. This bill will stop the transformation of our society into a rigged video game casino by banning the prediction markets that allow the powerful insiders to get rich by commodifying every part of our lives.
Representative Casar echoed these concerns, emphasising that government decisions and human tragedies should not be monetised. Both lawmakers pointed to scenarios, such as large sums placed on Middle Eastern military action ahead of official announcements, as evidence that unregulated markets can be exploited and erode public trust.
While the legislation is framed largely as a consumer protection and ethical reform, its authors have stressed that any regulatory gap allowing these wagers effectively treats national crises and state actions as betting games, a dynamic they say is corrosive to democratic governance and societal norms.
Policy and Regulatory Crosscurrents
The BETS OFF Act sits at the intersection of gambling law, financial markets and emerging technologies. Prediction markets have long been positioned by supporters as forecasting tools that aggregate crowd wisdom, but critics argue that when paired with real money betting, especially on government affairs, they resemble unlicensed gambling with weak oversight.
At the federal level, this recent effort builds on broader debates over how to classify and regulate prediction markets. The Commodity Futures Trading Commission (CFTC) is already advancing rulemaking on prediction markets and event contracts as part of its mandate under the Commodity Exchange Act.
At the state level, legislators are also sharpening enforcement around alternative gaming formats. For example, in Minnesota, proposals such as SF4511 seek to ban both prediction markets and sweepstakes casino products, equating certain contracts with unlicensed gambling activity.
These legislative currents reflect a growing pattern of policymakers seeking to clarify where gambling regulations end and financial innovation begins, especially when real money, geopolitical events and public welfare are involved.
Bill Backing and Political Dynamics
The BETS OFF Act has drawn endorsements from a cross‑section of advocacy groups concerned with consumer protection, financial ethics and national security. This includes organisations critical of commoditising human life or geopolitical outcomes for profit.
Supporters argue that closing these regulatory gaps will not only protect ordinary Americans but also uphold fundamental ethical standards in how markets operate. However, questions remain about the bill’s path forward in a divided Congress and whether bicameral backing can sustain momentum amid competing legislative priorities.
While some Republican lawmakers agree with the need for reform, they have noted differences in approach compared to the Democrats’ proposal.
Implications for Operators and the Prediction Market Sector
If the BETS OFF Act becomes law, prediction market platforms would face a significant contraction of permissible contract offerings. Operators like Polymarket and Kalshi would need to eliminate markets tied to government action, war, terrorism, and other prohibited outcomes, narrowing product lines and potentially reducing trading volumes.
This shift could also prompt platforms to reconsider their compliance frameworks and business strategies, especially regarding offers that skirt traditional gambling definitions. Platforms may need to transition to model approaches more clearly aligned with financial derivative standards or restrict their services in the U.S. market.
Beyond the commercial impact, the bill underscores a broader regulatory pivot: as prediction markets gain prominence, legislators are increasingly willing to impose explicit legal boundaries governing where and how wagers are permitted.
Looking Ahead: Enforcement, Jurisdiction and Debate
The BETS OFF Act now enters the legislative process, where its provisions will be debated, amended, and reconciled. Key questions for the prediction market industry and regulators include:
- How to define events with predetermined outcomes in legislative text
- The jurisdictional overlap between financial regulators like the CFTC and gambling enforcement bodies
- Whether similar restrictions may emerge globally as other countries assess prediction market risks
This legislative push follows a growing list of U.S. proposals targeting prediction markets, including measures aimed at banning public officials from investing in such platforms.
Whatever the outcome, the BETS OFF Act marks a potentially pivotal moment in how the United States approaches real-money prediction markets, reshaping both consumer protection norms and the regulatory landscape around wagering on public affairs.