U.S. lawmakers draft bill to restrict prediction markets, Iran airstrike bets spark controversy

LootboxPhobia · 2026-03-05T21:54:24+00:00

U.S. Democratic lawmakers Mike Levin and Chris Murphy are drafting legislation to restrict prediction markets to prevent profit-making from military actions. They believe that gaining economic advantages through insider knowledge should be considered illegal, as current Commodity Exchange Act restrictions are insufficient. This move comes amid rising public concern over related platforms.

LootboxPhobia

2026-03-05 21:54:24

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Investing.com – U.S. Democratic lawmakers, Representative Mike Levin and Senator Chris Murphy, are drafting legislation to restrict prediction markets after suspicious timing bets were placed before the U.S.-Israel airstrikes on Iran, Levin told Reuters.

The California congressman said he and Murphy are working on the bill. “It’s very clear to me that if someone uses inside knowledge of military actions to gain financial benefits, that should be absolutely illegal,” Levin said in an interview.

The legislation targets platforms like Polymarket and Kalshi, which are facing increasing scrutiny due to concerns that their betting could incentivize conflict and leak confidential information.

Levin stated that the Commodity Exchange Act bans event contracts deemed “against public interest,” including those related to war, terrorism, or assassination, but current restrictions on prediction markets are insufficient.

On Wednesday, Polymarket removed bets on the likelihood of a nuclear explosion anywhere in the world after online criticism.

“People betting on war and death serve no benefit,” Levin said, adding that other Democratic lawmakers share similar concerns, and he hopes to build a coalition around this effort.

Last month, six Democratic senators criticized these platforms after a trader made approximately $410,000 in profit by betting on the resignation of Venezuelan President Nicolás Maduro.

On Saturday, analytics firm Bubblemaps reported that six accounts, hours before an airstrike that killed Iran’s top leader Khamenei, bet on his removal on Polymarket, earning $1.2 million in profit.

Levin and Murphy responded on X platform, stating that these trades indicate insiders are profiting from the war. Murphy said such trades should not be legal, and he plans to introduce legislation as soon as possible.

While the bill is unlikely to become law in the short term, it puts pressure on prediction market platforms.

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