By Nick Devor
U.S. lawmakers have introduced five separate bills in recent months related to prediction markets. Some would ban government employees and elected officials from participating in the markets; others propose prohibiting prediction markets from offering bets tied to war, terrorism, or death.
The calls for reform come amid growing concerns about insider trading on the platforms. Critics of prediction markets have applauded Congress' efforts, but legal experts say many of Congress' proposals are already addressed under existing regulation.
The Commodity Exchange Act grants regulatory dominion over event contracts sold on prediction markets to the U.S. Commodity Futures Trading Commission. It allows the CFTC to pull contracts from CFTC-licensed prediction markets if those contracts involve terrorism, war, or assassination, and are found to be "contrary to the public interest." The Commodity Exchange Act also bars insider trading.
Congressional action around prediction markets began in the wake of the U.S. capture of Venezuelan President Nicolás Maduro, when a suspected insider made a well-timed bet on Maduro's ouster through the prediction-market platform Polymarket. More suspicious trades preceded the U.S.-Israel war in Iran.
Polymarket customers trade anonymously with cryptocurrency, making it difficult to know who's placing trades.
"On the day before the Iran war, 150 accounts placed highly-unusual bets on Polymarket that the war would start the next day," Representative Greg Casar (D., Texas) said at a press conference Tuesday introducing his prediction market bill with Sen. Chris Murphy (D., Conn.), the fifth such bill since January.
All of the bets referenced by Casar were placed on the international version of Polymarket, complicating U.S. regulatory efforts. The U.S. version of Polymarket doesn't offer markets tied to war, because that is against CFTC rules.
Polymarket didn't respond to a request for comment. The firm has a data sharing partnership with Dow Jones, the publisher of Barron's.
"Most of the things that people don't like about prediction markets are already unlawful," says Todd Phillips, an assistant professor of law at Georgia State and expert on financial regulation who has filed amicus briefs in the many prediction-market lawsuits working their way through the court system.
He says the problem stems from enforcement. Barron's has previously reported that the CFTC has seen significant cuts in its enforcement division, including the loss of all enforcement attorneys in its flagship Chicago office.
"CFTC-registered exchanges are required to monitor for manipulation, fraud, and insider trading. We're consistently working with our exchanges to make surveillance capabilities even stronger," a CFTC spokesperson said in a statement to Barron's.
The international version of Polymarket would only be subject to U.S. law if its contracts were available for Americans to trade, Phillips says. Accessing the international version of Polymarket to place bets on the Iran war requires Americans to take additional steps, including using a virtual private network, or VPN, to obscure their location.
"If Polymarket's offshore exchange is offering contracts to Americans, it's violating the Commodity Exchange Act and the CFTC can sue them," Phillips says.
The CFTC has taken such steps in the past. In January, 2022, the CFTC filed and settled charges against Polymarket for offering event contracts to U.S. citizens without proper CFTC licensure. The firm was subsequently banned in the U.S.
Polymarket built up its international business before regaining permission from the CFTC in 2025 to have an American version of its platform. The firm's stateside business is still limited, with most contracts related to sports matches. U.S. customers need to get through a wait list before they can begin trading.
Even though it now has some U.S. operations, the company is able to list U.S.-banned contracts, like those related to war, on its international version, says Harry Crane, a Rutgers statistician who sits on the CFTC's Innovation Advisory Committee. Those are the contracts highlighted on the firm's main website, Polymarket.com.
"I think the culprit here isn't the markets -- it's the fact that people are leaking insider information," Crane says.
"That's already illegal," he adds. "So making more stuff illegal isn't going to make them any less likely to do it, as far as I'm concerned."
In response to the two separate bills introduced by Senators Richard Blumenthal (D-Conn.) and Jeff Merkley (D-Ore.), prediction-market firm Kalshi said in a statement: "Kalshi already bans insider trading and markets directly tied to death and war. As a U.S.-based exchange, we support regulators and policymakers from both sides of the aisle in their efforts to keep these markets safe and responsible in America."
Kalshi said it was still reviewing the more recent bills.
Alexandra Thornton, senior director of financial regulation policy at the Center for American Progress, a Washington, D.C.-based think tank, welcomes congressional involvement.
"Prediction markets invite participation by pretty much everyone, and the CFTC does not historically have experience with retail investors," she says. "This is something that affects all Americans, the security of all Americans, and our democratic system, frankly. And so Congress should be making the rules here."
Write to Nick Devor at nicholas.devor@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 19, 2026 02:30 ET (06:30 GMT)
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