Bets Off Act seeks to restrict prediction markets on war, politics, and more

Another day, and another federal piece of legislation is trying to make its way in Congress. Days after Sen. Richard Blumenthal pitched his own version of regulating prediction markets to lawmakers, Sen. Chris Murphy and Rep. Greg Casar have filed the Bets Off Act, which seeks to attack the vertical from a different angle.

This news comes against a backdrop of several important developments in the market, with Kalshi facing its first criminal charges in a US court in Arizona, and a newly-formed trade group, Gambling Is Not Investing, set up by a former President Donald Trump chief of staff and cabinet insider. Sen. Murphy and Rep. Casar’s legislation is important as it unites actors across the political divide (Murphy is a Democrat and Casar a Republican). Specifically, the new bill seeks to address concerns about leaking state secrets and endangering lives vis-à-vis military action and interventions. The Bets Off Act seeks to ban wagers on events where participants already know the outcome, which will extend to events where a single actor controls the outcome. They are inside Trump’s White House advising the president not based on what’s best for national security but based on what will make them money. That is unforgivable, Murphy said. Casar has specifically used betting terminology to describe prediction markets - at odds with what companies such as Polymarket and Kalshi argue their products represent (i.e., financial options, not sports gambling). More worringly, Casar argues that someone already knows the outcome of an event when some of these prediction markets are placed. He is not incorrect, as the recent capture of Nicolas Maduro, the illegitimate President of Venezuela, was marked by a suspicious series of bets that were placed with a prediction market platform and fetched more than a $400,000 payout. Accounts that placed wagers on Israel attacking Iran are already being investigated. Sen. Blumenthal and the Gambling Is Not Investing trade group have highlighted fears that bad actors and foreign adversaries may be tipped by such prediction markets if classified information is leaking.

From the Super Bowl halftime show to the length of White House press conferences, people are allowed to bet on events where someone else already knows and already controls the outcome, Casar remarked. Casar was particularly critical of the way such information is backchanneled to people in power, and lambasted the practice: The people at the very top are making money off of it. They want to go further, where the entire country is a casino and the rich and powerful always win. Congress must act before we get there. Despite some Republicans landing their support, going after prediction markets would be at odds with the current administration’s tacit approval of the sector, which could hinder any efforts to push through with the relevant legislation.