U.S. Lawmakers Introduce BETS OFF Act to Ban Prediction Market Bets on Sensitive Government Actions

This analysis is based on the Reuters report [1] published on March 17, 2026, regarding federal legislation targeting prediction markets.

Senator Chris Murphy (D-CT) and Representative Greg Casar (D-TX) introduced the BETS OFF Act (Banning Event Trading on Sensitive Operations and Federal Functions) on March 17, 2026 [1]. The legislation seeks to prohibit prediction market bets on military operations, terrorism, war, assassination, and other sensitive government actions where an individual knows or controls the outcome [1]. This bill represents an escalation in Congress’s effort to regulate the rapidly growing prediction market industry, which handled over $40 billion in volume during 2025 [4].

The proposed legislation would prohibit Commodity Futures Trading Commission (CFTC)-registered entities from listing contracts involving sensitive events [1]. This builds upon existing regulatory momentum, including the DEATH BETS Act sponsored by Representative Mike Levin and Senator Adam Schiff, and CFTC guidance issued on March 12, 2026 [1]. The timing suggests coordinated congressional action alongside ongoing CFTC rulemaking through its Advanced Notice of Proposed Rulemaking (ANPRM) [3].

The prediction market industry faces multi-front regulatory pressure. Beyond federal legislation, state authorities are actively asserting jurisdiction, particularly in Nevada [5]. The CFTC has issued guidance focusing on both political/military event contracts and sports-related event contracts [1]. The ANPRM comment period remains ongoing, indicating that final rules are still under development [3].

Platforms including Kalshi and Polymarket, which currently offer contracts on government-related events, would need to adjust their offerings to comply with potential new rules [1]. The business models of these platforms face significant uncertainty as regulatory frameworks take shape.

The BETS OFF Act represents a coordinated approach across multiple regulatory dimensions. At the federal level, both legislative (Congress) and executive (CFTC) branches are moving simultaneously. At the state level, authorities are challenging prediction market operations under existing gambling laws [6]. This multi-jurisdictional approach creates compounding compliance challenges for platforms.

Lawmakers have framed this legislation primarily around national security concerns, citing the potential for exploitation of sensitive government actions in betting markets [1]. This framing suggests the legislation may have bipartisan appeal, particularly regarding military operations and terrorism-related contracts, even as prediction markets have traditionally attracted libertarian-leaning opposition to gambling restrictions.

The prediction market industry’s explosive growth—$40+ billion in 2025 volume [4]—has outpaced regulatory frameworks, triggering this aggressive congressional response. The early-stage nature of the legislation means its ultimate impact remains uncertain, but the regulatory trajectory clearly points toward greater restrictions on sensitive event trading.

• Operational restrictions on sensitive event contracts could significantly reduce trading volume and revenue
• Compliance costs may increase substantially as platforms must navigate both federal and state regulations [5][6]
• Business models reliant on political and military event trading face potential restructuring requirements

• Existing positions on sensitive events could be affected by future rules
• Market availability for certain event categories may decrease
• Regulatory uncertainty creates risk for long-term positions

• Potential conflicts between federal and state jurisdiction over prediction markets remain unresolved [5]
• The CFTC’s ANPRM process could produce rules that either complement or conflict with congressional action [3]

• Platforms that proactively adjust compliance frameworks may gain competitive advantages
• Non-sensitive event categories (sports, entertainment, weather) may become relatively more important
• Clarity in regulations could enable new market participants who have been waiting for regulatory certainty

The BETS OFF Act introduced on March 17, 2026, represents the most recent and significant legislative effort to restrict prediction market activity in the United States. The bill targets military operations, terrorism, war, assassination, and other sensitive government actions [1]. Key sponsors include Senator Chris Murphy and Representative Greg Casar, building on earlier efforts through the DEATH BETS Act [1].

The legislation arrives amid unprecedented growth in the prediction market industry, with 2025 volume exceeding $40 billion [4]. However, the industry’s expansion has triggered coordinated regulatory response from Congress, the CFTC, and state authorities [1][2][3][5][6]. The path to law remains uncertain given the legislation’s early stage, but the regulatory momentum clearly favors increased oversight and restrictions on sensitive event trading.

Platforms including Kalshi and Polymarket should monitor legislative progress through congressional committees while also engaging with the ongoing CFTC rulemaking process [3]. The resolution of federal-state jurisdiction conflicts will be critical in determining the ultimate regulatory landscape for prediction markets.