U.S. Democratic lawmakers Senator Chris Murphy and Representative Greg Casar unveiled a bill on Tuesday that would outlaw betting in prediction markets on military operations and other sensitive government actions, intensifying oversight on a rapidly expanding segment of online wagering.
The proposed measure - named the Banning Event Trading on Sensitive Operations and Federal Functions (BETS OFF) Act - aims to make it unlawful to place wagers tied to government action, terrorism, war, assassination, and any event in which an individual has knowledge of or control over the outcome.
Lawmakers cited concerns that the timing of certain trades in prediction markets has raised questions about legality and ethics. Specifically, well-timed bets ahead of U.S.-Israeli air strikes in Iran and operations in Venezuela have prompted heightened attention from Capitol Hill and regulators.
The BETS OFF Act is one of several legislative responses now circulating in Congress. Earlier this month, Democratic Representative Mike Levin and Senator Adam Schiff introduced the DEATH BETS Act, which would explicitly bar any Commodity Futures Trading Commission-registered entity from listing contracts that involve, relate to, or reference terrorism, assassination, war, or an individual’s death.
At the same time, the Commodity Futures Trading Commission is working on a regulatory framework tailored to prediction markets. While the introduction of these bills increases congressional scrutiny, the path for the BETS OFF Act to become law remains uncertain.
Advocates of the measures argue they are a response to both legal and ethical questions arising from prediction market activity. Critics and market participants have raised a variety of perspectives on how best to balance free expression, market innovation, and the protection of sensitive public functions.
With multiple bills and the CFTC’s regulatory efforts underway, prediction markets face intensified examination from lawmakers and regulators. The developments signal a period of potential policy change for platforms that allow event-based wagering tied to geopolitical and government actions.
Summary
The BETS OFF Act would ban wagering on government actions, terrorism, war, assassination, and events where an individual knows or controls the outcome. It follows concerns raised by well-timed bets tied to U.S.-Israeli air strikes in Iran and Venezuela operations. Parallel efforts include the DEATH BETS Act and ongoing CFTC rulemaking.
Key points
- The BETS OFF Act targets wagers on sensitive government functions and events.
- Comparable legislation - the DEATH BETS Act - would prohibit CFTC-registered entities from listing contracts tied to terrorism, assassination, war, or an individual’s death.
- The CFTC is developing a regulatory framework for prediction markets, and congressional action could further change the operating environment for these platforms.
Risks and uncertainties
- Legislative uncertainty - The path for the BETS OFF Act to become law is unclear, creating regulatory unpredictability for prediction market operators.
- Regulatory overlap - Multiple concurrent initiatives, including the DEATH BETS Act and CFTC rulemaking, could produce conflicting obligations or compliance challenges for platforms.
- Reputational and legal risk - Well-timed trades tied to military or geopolitical events have raised ethical and legal concerns that could affect platform participation and oversight.