US Lawmakers Introduce “BETS OFF” Act to Ban War‑Related Prediction Market Contracts
Washington, D.C. – On Tuesday, Representative Greg Casar (D‑TX) and Senator Chris Murphy (D‑CT) announced legislation that would prohibit prediction‑market platforms from offering contracts tied to sensitive military operations and other federal functions. The bill, dubbed the Banning Event Trading on Sensitive Operations and Federal Functions (BETS OFF) Act, comes after a series of unusually large wagers on Polymarket that suggested a near‑term escalation between the United States‑Israel alliance and Iran.
What sparked the proposal?
Polymarket, a decentralized prediction‑market platform that allows users to bet on a wide range of outcomes, hosted several contracts in early March that speculated on whether the United States would launch a ground invasion of Iran, the timing of a cease‑fire, and potential changes in Iranian leadership. The volume and size of the bets raised suspicions that some participants might have been acting on non‑public intelligence.
Senator Murphy told reporters that “there are credible concerns that individuals with insider knowledge of possible U.S. military action could be profiting from that information.” Representative Casar echoed the sentiment, warning that “policy decisions of life‑or‑death magnitude should not be swayed by market participants standing to earn hundreds of thousands of dollars.”
Key provisions of the BETS OFF Act
- Ban on contracts that predict the initiation, execution, or outcome of U.S. military actions, including invasions, air strikes, and covert operations.
- Prohibition of bets concerning any federal function that could affect national security, such as sanctions, diplomatic recognitions, or classified intelligence disclosures.
- Enforcement mechanisms that would empower the Commodity Futures Trading Commission (CFTC) and the Department of Justice to pursue civil and criminal actions against platforms and users that violate the ban.
- Mandatory reporting requirements for prediction‑market operators to disclose any contracts that fall within the prohibited categories to regulators within a specified timeframe.
A broader legislative push
The BETS OFF Act follows a series of recent attempts to tighten oversight of prediction markets:
- DEATH BETS Act – Introduced by Senator Adam Schiff (D‑CA) last week, this bill seeks to bar platforms from listing contracts related to war, terrorism, assassination, or the death of specific individuals.
- State‑level actions – Earlier this month, Arizona’s Attorney General filed criminal charges against Kalshi, another regulated prediction‑market operator, alleging violations of state gambling statutes.
Together, these measures suggest a coordinated effort by members of Congress to address what they view as a growing regulatory gray area where financial speculation intersects with national security.
Platform responses
Polymarket has defended its model, emphasizing that the “wisdom of the crowd” can generate unbiased forecasts during complex crises. In a statement posted on the site, the platform argued that users were seeking answers unavailable through traditional media channels, and that the market was intended to serve public interest rather than influence policy.
Kalshi, which offers regulated contracts under CFTC oversight, has limited its exposure to the Middle‑East conflict to broader geopolitical outcomes—such as the likelihood of a nuclear agreement between Iran and the United States—rather than specific military actions.
Potential impact on the crypto‑related prediction‑market sector
- Regulatory risk escalation – The bills could expand the CFTC’s jurisdiction over blockchain‑based prediction markets, compelling platforms to adopt more rigorous compliance programs or to discontinue certain contracts altogether.
- Liquidity shift – If high‑profile war‑related contracts are removed, market makers may redirect capital toward less sensitive topics (e.g., sports, macro‑economic data), potentially reshaping the ecosystem’s revenue streams.
- Legal precedent – Successful passage of either bill would set a precedent for the classification of prediction‑market contracts as non‑financial “information services” subject to securities or gambling regulation, influencing future legislative drafts.
- User behavior – Participants seeking to hedge geopolitical risk may migrate to alternative venues, including offshore or unregulated platforms, increasing the potential for illicit activity.
Key takeaways
- Legislation introduced – The BETS OFF Act targets prediction‑market contracts linked to U.S. military actions and other sensitive federal functions.
- Motivation – Lawmakers cite concerns that insider information could be used to profit from, or even influence, national‑security decisions.
- Related bills – The DEATH BETS Act, also under consideration, expands the ban to contracts involving war, terrorism, and individual deaths.
- Platform stance – Polymarket argues its markets provide valuable public insight, while Kalshi limits exposure to broader geopolitical outcomes.
- Regulatory outlook – If enacted, the bills could substantially tighten oversight of crypto‑based prediction markets, prompting stricter compliance measures and potentially reshaping the sector’s product offerings.
As the proposals move through committees, stakeholders in the blockchain and prediction‑market communities will be watching closely for any signals that could affect the viability of war‑related contracts and the broader regulatory environment for decentralized finance.
Source: https://cointelegraph.com/news/us-lawmakers-prediction-market-bets-war-bill?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
