Lawmakers Target Kalshi, Polymarket With BETS OFF Act Proposal

U.S. lawmakers are stepping up efforts to regulate prediction markets, with new legislation targeting wagers tied to sensitive national and global events.

Chris Murphy and Greg Casar have introduced a bicameral bill known as the BETS OFF Act, short for Banning Event Trading on Sensitive Operations and Federal Functions

The proposal aims to prohibit prediction market betting on events such as government actions, wars, terrorist incidents, and assassinations.

The lawmakers argue that allowing such contracts raises serious ethical and security concerns. In particular, markets tied to real-world crises could create financial incentives for harmful behavior or enable individuals with insider knowledge to profit unfairly.

Under the proposed legislation, prediction platforms would be restricted from offering contracts on events where outcomes could be influenced, controlled, or anticipated by insiders. This includes scenarios involving federal decision-making processes or sensitive geopolitical developments.

It is worth noting that the bill comes at a time when platforms like Kalshi and Polymarket have gained traction among retail and institutional users. These platforms allow participants to trade on the outcomes of various real-world events, ranging from elections to economic indicators.

Regulators, including the Commodity Futures Trading Commission, have already been scrutinizing such markets, particularly over concerns related to compliance, market manipulation, and the classification of event-based contracts.

The BETS OFF Act marks one of several recent legislative efforts aimed at tightening oversight of the sector

Policymakers appear increasingly focused on drawing clearer boundaries around what types of events can be commodified for trading purposes.

Supporters of the bill say it is necessary to prevent the misuse of financial markets and protect the public interest. However, critics warn that overly broad restrictions could stifle innovation in emerging financial technologies and limit the growth of prediction markets as a tool for price discovery.

As debate continues, the legislation highlights the growing tension between innovation and regulation in the evolving landscape of event-based trading platforms.

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