New Bill Would Crack Down on Prediction Markets After Suspicious Bets on Maduro, Iran

Two Democratic lawmakers on Tuesday introduced legislation that would prohibit online prediction markets from allowing bets on government actions that could be easily gamed by insiders.

The proposed Banning Event Trading on Sensitive Operations and Federal Functions (BETS OFF) Act, unveiled by US Sen. Chris Murphy (D-Conn.) and Rep. Greg Casar (D-Texas), would ban "wagering on government actions, terrorism, war, assassination, and events where an individual knows or controls the outcome."

The lawmakers said the legislation was necessary due to suspiciously timed bets that were placed on the cryptocurrency-based prediction platform Polymarket related to imminent US military actions in Venezuela and Iran, raising concerns that Trump administration officials were using insider information to profit from life-or-death policy decisions.

The fact that the bets were placed on Polymarket is notable because Donald Trump Jr., President Donald Trump's eldest son, sits on the company's advisory board. Wired reported last year that Polymarket also received an investment from 1789 Capital, the venture capital firm where Trump Jr. serves as a partner.

Given this potential massive conflict of interest, argued Murphy, it is imperative for Congress to step in and put a stop to possible insider trades related to war and other government policy matters.

"There’s no getting around the fact that any prediction market where somebody knows or controls the outcome of a bet is ripe for corruption,” said Murphy. “Even worse, prediction markets are also an avenue by which government decisions get influenced by who's making money off them, and that should be unforgivable to the American public."

Murphy added that "when events that involve good and evil, life and death become just another financial product, morality no longer matters and the soul of America is fundamentally corrupted."

Casar said that the legislation is needed to battle the "crisis of corruption" engulfing the US government during President Donald Trump's second term.

"Too often, prediction markets are becoming yet another place for rich and powerful people to cash in on insider information," Casar said. "This bill will put a stop to that."

Rep. Rashida Tlaib (D-Mich.)—who is co-sponsoring the bill along with Sen. John Hickenlooper (D-Colo.), Rep. Yassamin Ansari (D-Ariz.), and Rep. Gabe Amo (D-RI)—said it was "sickening" to think of Trump administration insiders making money from their own acts of military aggression.

"No one should be able to gamble on death and destruction, especially people connected to Trump with insider knowledge,” Tlaib said. “Congress must ban profiting from war and war crimes."