Senators move to ban prediction market bets by elected officials

Pooja Rajkumari

March 5, 2026 3 min read

HOOD

Prediction markets are drawing fresh scrutiny in Washington as lawmakers move to restrict how elected officials and senior government staff can participate in the rapidly growing industry.

A new bill led by Democratic Senators Jeff Merkley of Oregon and Amy Klobuchar of Minnesota would ban the president, vice president, and members of Congress from trading event contracts, financial bets tied to the outcome of specific real-world events.

The legislation comes after a series of controversial wagers on geopolitical developments and political events placed prediction markets under the spotlight.

Lawmakers target political betting on prediction markets

Prediction markets such as Polymarket and Kalshi allow users to wager on a wide range of outcomes, from sports results and entertainment awards to political elections and economic policy decisions.

Major crypto players like Coinbase (NASDAQ: COIN) and Robinhood (NASDAQ: HOOD) have also increasingly become involved with prediction markets.

For instance, Robinhood launched event contracts in 2024 through its derivatives platform Robinhood Derivatives LLC. These contracts allow users to trade on the outcome of certain events, similar to prediction markets.

Coinbase expanded its prediction markets in the U.S. in December 2025, in partnership with Kalshi, to allow trading on real-world events.

The proposed legislation would bar top government officials from trading these contracts and limit participation by senior executive branch staff. Violators could face fines starting at $10,000, as per CNBC .

Merkley said the measure is intended to address concerns about insider information being used to profit from sensitive government actions.

“Members receive all sorts of tips and advice,”Merkley said in an interview. “The actual demonstration of insider trading is too difficult to be sufficient to address the problem.”

He added that the risk extends beyond direct misconduct.

“The problem becomes both real corruption … and the appearance of corruption and conflict of interest,”Merkley said.

While the bill is unlikely to pass in the current Republican-controlled Congress, lawmakers say it could help establish the regulatory groundwork for how prediction markets are treated in the future.

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Geopolitical bets raise alarm among senators

The push for tighter rules intensified after several high-profile wagers tied to global events.

Prediction markets drew attention after bettors profited from correctly predicting the removal of Venezuelan President Nicolás Maduro and the timing of a recent U.S. attack on Iran.

According to a New York Times analysis , betting activity on Polymarket surged shortly before the Iran strikes, including wagers predicting that the U.S. would launch an attack the following day.

Sen. Chris Murphy (D-Conn.) said the activity raises serious concerns about potential misuse of insider information.

Murphy said in a video posted to X,

“There was a suspicious amount of new activity, people making a very specific bet on Friday that we would go to war with Iran on Saturday."

Murphy alleged that individuals close to policymakers may have had advance knowledge of the military action.

“Obviously there are people close to Donald Trump who on Friday knew what was happening on Saturday,”Murphy said.

He added that those with inside knowledge may have profited from the bets.

Growing scrutiny across Washington

Even before the recent geopolitical wagers, Democratic lawmakers had begun raising concerns about the broader prediction market industry.

Sen. Adam Schiff (D-Calif.) and several colleagues recently urged the Commodity Futures Trading Commission to prohibit event contracts that involve betting on physical injury, death, or military conflict.

The senators pointed to markets that allowed wagers on events such as a potential NASA rocket explosion, Russia’s military actions in Ukraine and the fate of Maduro.

This story was originally published by TheStreet on Mar 5, 2026, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.