Congress Predictably Turns Its Attention to Prediction Markets

Key Takeaways

• Congress has introduced more than 10 bills targeting prediction markets since January. Lawmakers in both chambers have introduced bills ranging from narrow insider-trading restrictions for public officials to broader prohibitions on sports, war, election and government action contracts. At the same time, the Commodity Futures Trading Commission (CFTC) has launched a formal rulemaking process, with comments due April 30.
• The issue has now moved beyond a narrow derivatives-law debate. In Congress, criticism is increasingly being framed around three themes: (1) whether prediction markets are functioning as unlicensed gambling products that intrude on state and tribal authority; (2) whether certain contracts fall within the Commodity Exchange Act’s (CEA’s) public-interest prohibitions relating to war, terrorism, assassination or gaming; and (3) whether government officials or other insiders can exploit nonpublic information for profit.
• The most sweeping proposals are unlikely to be enacted in their current form given the governing environment. But the narrower integrity bills aimed at insider trading by public officials have a more plausible bipartisan lane. Even absent enactment in this Congress, the legislative record being assembled now could become the foundation for future oversight, investigations and more aggressive statutory action.

What Happened

Prediction markets have become the focus of congressional scrutiny in recent months. Since January, lawmakers have rolled out multiple proposals aimed at different parts of the market. Those measures include:

• The January House bill from Rep. Ritchie Torres (D-NY) targeting insider trading by government officials
• The March 10 DEATH BETS Act from Sen. Adam Schiff (D-CA) and Rep. Mike Levin (D-CA) targeting contracts tied to war, assassination, terrorism and death
• The March 17 BETS OFF Act from Sen. Chris Murphy (D-CT) and Rep. Greg Casar (D-TX) targeting government action, war, terrorism and other events susceptible to manipulation
• The bipartisan March 23 Prediction Markets Are Gambling Act from Sens. Schiff and John Curtis (R-UT) targeting sports and casino-style contracts
• The bipartisan March 25 PREDICT Act from Reps. Adrian Smith (R-NE) and Nikki Budzinski (D-IL) targeting insider trading by senior federal officials
• Two additional March 26 measures, the STOP Corrupt Bets Act and the bipartisan Public Integrity in Financial Prediction Markets Act

The CFTC is moving in parallel. On March 12, the agency issued an Advance Notice of Proposed Rulemaking (ANPR) on prediction markets, expressly seeking comment on the application of the CEA, the scope of contracts that may be contrary to the public interest and issues including manipulation, abusive trading, inside information and the meaning of “gaming.” The comment period closes April 30.

The surge in congressional interest underscores the reality that prediction markets are raising questions surrounding integrity, public corruption, consumer protection and federal-state regulatory conflict.

A Surge in Congressional Scrutiny

Congressional concern over prediction markets appears to be focused on three distinct theories.

The first is the gambling and federalism theory. The Schiff-Curtis bill argues that sports prediction contracts are, in substance, sports bets and casino-style gaming products, and that federal treatment of those products through CFTC-regulated platforms intrudes on state authority, tribal sovereignty and existing state consumer-protection regimes. Senate Agriculture Chairman John Boozman (R-AR) has separately described the space as “the Wild West” and said it likely needs to be cleaned up through regulation or legislation.

The second is the public-interest theory under the CEA. The statute permits the CFTC to determine that certain event contracts are contrary to the public interest if they involve unlawful activity, terrorism, assassination, war or gaming. The DEATH BETS Act and the BETS OFF Act should be viewed as efforts to remove agency discretion and codify a harder line against contracts tied to war, terrorism, assassination, government action and similar events that critics view as especially susceptible to abuse or manipulation. The CFTC’s own ANPR confirms that these categories and the meaning of “gaming” are now central to the agency’s rulemaking inquiry.

The third is focused on corruption and insider trading. That concern has grown more acute because of public reporting on unusually well-timed trades tied to Venezuela and Iran developments, which has triggered congressional scrutiny and skepticism. Congress has responded with both House and Senate proposals that would bar senior federal officials, congressional staff, executive-branch employees and in some cases family members from trading prediction market contracts where they have access to material nonpublic information through official duties. California has now moved in the same direction at the state level by barring gubernatorial appointees from using insider knowledge to profit on prediction markets.

Following the March 23 introduction of the Schiff-Curtis bill, leading prediction markets companies announced new restrictions and surveillance measures aimed at insider trading by politicians, athletes and other participants with special access or influence.

Sens. Schiff and Curtis responded publicly that the moves were necessary but insufficient. The speed at which both the legislation and the industry response have accumulated is itself a signal: Congress has concluded the status quo is not sustainable, and that conclusion is already reshaping CFTC enforcement priorities, the rulemaking record and the posture of state regulators litigating these questions in parallel.

What the Near-Term Outlook Looks Like

The immediate outlook is mixed.

The broadest prohibitory bills still face an uphill path in the current Congress. The CFTC under Chairman Michael Selig has asserted exclusive federal jurisdiction over prediction markets and has opened a rulemaking process that contemplates a more coherent regulatory framework rather than a blanket shutdown of prediction markets. That posture does not expressly foreclose legislation, but it does make sweeping statutory prohibitions materially harder in the near term. The Trump administration appears strongly supportive of prediction markets and thus skeptical of legislation that would impose meaningful limits on them.

The narrower public-integrity measures may enjoy relatively better prospects of enactment. The bipartisan Senate bill led by Sens. Elissa Slotkin (D-MI), Todd Young (R-IN), Schiff and Curtis and the bipartisan House PREDICT Act led by Reps. Smith and Budzinski are framed less as attacks on the platforms themselves and more as ethics and market-integrity reforms. That gives them a clearer political lane, particularly because they are tied to a simple proposition that is difficult to defend against publicly: government officials should not be able to use nonpublic information obtained through public office to place profitable wagers on future events.

Even if none of these measures becomes law this Congress, the practical significance should not be understated. The record now being built through bills, press releases, public letters, litigation and the CFTC rulemaking will be available to future committees and future majorities.

If Democrats retake the House or Senate, prediction markets will likely be an early and predictable target for committee oversight and investigation. Committee chairmanships determine subpoena authority, hearing schedules and the direction of investigative staff, and the incoming chairs of relevant committees or jurisdiction would inherit a record that is already largely built.

Purported insider trading incidents tied to military operations and broader geopolitical turbulence, government-related conflicts of interests, a CFTC chairman whose post-confirmation conduct generated a formal letter of concern from Agriculture Committee members, and a paper trail of state criminal and civil enforcement actions would collectively give a new majority committee substantial investigative material without needing to develop it from scratch.

Perhaps most importantly, given the emerging bipartisan consensus on the government-official trading bills, it is not inconceivable that oversight and investigative interest in prediction markets develops on a bipartisan basis even in the current Congress.

What Clients Should Be Doing Now

1. Engage counsel now. Companies with exposure to prediction markets should retain counsel to assess their specific legal and regulatory risk, map that exposure against the pending legislation and develop a strategy for engaging the CFTC comment process and congressional offices before the April 30 deadline.
2. Conduct risk exposure. Companies with any exposure to prediction markets should review that exposure and take appropriate measures. That includes not only platform operators, but also investors, commercial counterparties, media and sports partners, data providers, and companies considering market participation or sponsorship arrangements. The legal and reputational analysis will differ materially depending on whether exposure relates to sports, elections, geopolitical events, government action or more conventional business-risk contracts. The pending legislative proposals make clear that Congress is drawing distinctions among those categories.
3. Develop policies and procedures prohibiting playing prediction markets. The current political focus began with prediction markets, but the underlying concern is broader: whether individuals with privileged access to information or control over outcomes can exploit these markets before the public catches up. Firms should evaluate access controls, employee trading restrictions, escalation protocols for suspicious activity and any internal policies governing personnel who work near government, national security, sports or other outcome-sensitive information streams.
4. The CFTC comment process deserves immediate attention. The agency has put squarely on the table the questions that will shape the next phase of this market, including the meaning of “gaming,” the treatment of contracts involving war and other sensitive events, detection of abusive trading, inside-information safeguards and public-interest considerations under the CEA. For many market participants, the comment window may be the most important near-term opportunity to shape the governing framework. Comments are due April 30.
5. Continue practicing good document hygiene. If congressional oversight does come, the first requests are likely to focus on internal communications concerning product design, contract approval, legal analyses of sports or government-action markets, communications with regulators, and internal discussions about abuse prevention, manipulation or user access. Companies should assume that materials created now could later be read through the lens of manipulation risk, consumer harm or insider advantage. That is a legal and operational issue now, not merely a political issue later.

Key Prediction Market Bills in Congress

Bill	Lead Sponsors	Scope	Bipartisan?
Prediction Markets Are Gambling Act	Schiff (D-CA), Curtis (R-UT) — Senate, March 23	Bans CFTC-registered entities from listing contracts resembling sports bets or casino-style games. Would amend CEA to confirm Congress never intended sports gambling authorization.	Yes — first bipartisan Senate bill
STOP Corrupt Bets Act	Merkley (D-OR), Warren (D-MA) — Senate; Raskin (D-MD) — House, March 26	Sweeping ban on prediction market contracts on elections, sports, government actions and military matters. Requires Government Accountability Office study; clarifies original CEA intent.	No
Public Integrity in Financial Prediction Markets Act	Slotkin (D-MI), Young (R-IN), Schiff (D-CA), Curtis (R-UT) — Senate, March 26	Prohibits president, vice president, Congress, political appointees and federal employees from trading event contracts using material nonpublic information (MNPI). Fines are 2x profit. Mandatory disclosure within 30 days for wagers over $250.	Yes — four senators
PREDICT Act	Smith (R-NE), Budzinski (D-IL) — House, March 25	Bans members of Congress, senior executive officials and staff from trading political event contracts. Penalty is 10% of transaction plus full disgorgement. Extends to spouses and dependent children.	Yes
DEATH BETS Act	Schiff (D-CA) — Senate, March 10	Explicitly prohibits CFTC-registered platforms from listing contracts involving terrorism, assassination, war or individual death. Removes CFTC regulatory discretion on these categories.	No
BETS OFF Act	Murphy (D-CT), Casar (D-TX), March 17	Bans wagers on events where participants already know or can determine the outcome, including events controlled by a single actor.	No
End Prediction Market Corruption Act	Merkley (D-OR), Klobuchar (D-MN) — Senate, early March	Categorically bars the president, vice president and members of Congress from trading any event contracts.	No
Public Integrity Act (House)	Torres (D-NY) + 28 co-sponsors — House, January 2026	Bans elected officials and political appointees from trading event contracts based on MNPI. Narrower scope than the Slotkin Senate version.	No
Prediction Markets Security and Integrity Act	Blumenthal (D-CT), Kim (D-NJ) — Senate	Prohibits use of MNPI in prediction market trading; bans conflicted contracts; mandates rules on permissible contracts, resolution and enforcement.	No
Fair Markets and Sports Integrity Act	Moore (R-UT) and others — House	Would ban prediction market wagers on sports, terrorism, war and assassinations unless state law specifically permits; returns jurisdiction to states.	Yes