US Senator Chris Murphy has announced plans to introduce legislation banning prediction markets he described as “corrupt and destabilizing” platforms.
In a February 27 statement, the Connecticut Democrat lawmaker argued that insiders with advanced knowledge of geopolitical events exploit these markets for personal financial gain.
Lawmaker’s Push to Ban Prediction Markets Draws Industry Fire
His announcement builds on concerns he voiced earlier this year regarding the commodification of real-world tragedies.
To illustrate his point, Murphy shared a screenshot of Polymarket betting odds related to military strikes involving Israel and Gaza, noting that the odds shifted amid escalating real-world tensions.
Industry experts, however, say the senator’s proposal conflates heavily regulated domestic exchanges with offshore platforms that the United States has already barred from operating.
Tarek Mansour, co-founder of the federally regulated domestic prediction market Kalshi, directly challenged the senator’s premise.
“Senator, regulated prediction markets are not allowed to do war markets. The market you’re posting is unregulated and offshore,” Mansour stated.
The Commodity Futures Trading Commission (CFTC) strictly prohibits onshore prediction markets from listing derivatives contracts involving terrorism, assassination, or war. These rules also extend to any other activities deemed contrary to the public interest.
Industry advocates argue Murphy is using illegal offshore markets to justify a blanket ban on domestic exchanges that already follow strict regulations to prevent those scenarios.
Adam Cochran, a prominent finance and cryptocurrency analyst, echoed Mansour’s sentiments. Cochran emphasized that offshore platforms offering services to US customers already face aggressive CFTC enforcement actions.
Furthermore, he added that domestic prediction markets operate under rigorous federal oversight specifically designed to prevent the insider trading Murphy aims to stop.
Meanwhile, Murphy’s potential legislative efforts align with the broader regulatory efforts to curb insider trading within the fast-rising prediction market space.
In January, U.S. Rep. Ritchie Torres, D-N.Y., introduced a new bill. The legislation is a targeted ethics measure designed to prevent covered government officials and elected representatives from trading in prediction markets using nonpublic information.
