Merkley bill would ban government officials from prediction markets

Payouts to unnamed bettors after the ouster of former Venezuelan President Nicolás Maduro and the U.S. attack on Iran put prediction markets in the spotlight. Now, lawmakers are trying to block elected officials from getting rich off them.

A previously unreported bill led by Sens. Jeff Merkley, D-Ore., and Amy Klobuchar, D-Minn., being introduced on Thursday would ban the president, vice president and members of Congress from trading event contracts — which allow users to wager on the outcome of specific events. It would also limit prediction market activity for senior executive branch officials and impose fines starting at $10,000 for violators.

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

The new legislation is unlikely to become law in the Republican-controlled Congress, but it may serve as a regulatory building block for the nascent industry.

Prediction markets like Polymarket and Kalshi are surging in popularity and allow users to place bets on the outcome of a wide-range of events. Some are trivial, like basketball games and Oscars best picture winners. Others are weightier, like who will win specific political races and whether or not the Federal Reserve will cut interest rates.

The platforms have come under scrutiny from lawmakers and regulators in recent months, particularly after wagers were placed on Polymarket on the fate of Iranian leader Ayatollah Ali Khamenei, who was killed in the U.S.-Israel attacks on Iran last weekend.

A New York Times analysis of Polymarket activity leading up to the Iran strikes found a surge of bets that an attack would happen by the next day.

“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,” Sen. Chris Murphy, D-Conn., said in a video posted to X on Wednesday. Murphy has said he would introduce legislation to ban trading on government action, though his office did not provide information on timing on Wednesday.

“Obviously there are people close to Donald Trump who on Friday knew what was happening on Saturday. and it is very likely, probable even, that the people that placed those bets were people with inside information,” Murphy said. “We need to raise hell about a new corruption scandal, another one, inside the White House.”

A White House official noted via email that gambling while on government property and insider trading are already illegal but did not directly respond to Murphy’s claims.

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