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After a group of users netted $1.2 million on Polymarket by wagering on the ousting of Iranian Supreme Leader Ayatollah Khamenei, two Democratic lawmakers are poised to introduce legislation to tighten regulations on prediction markets.
The $1.2 million figure was identified by Bubblemaps, an analytics firm that tracked six users who placed wagers hours before the initial wave of U.S. and Israeli airstrikes hit Iran. On the heels of another user landing $410,000 following the overthrow of Venezuelan President Nicolás Maduro, platforms like Polymarket and Kalshi have come under increased scrutiny for allegedly incentivizing insider trading based on global conflict.
Murphy and Levin target “war profiteering”
Sen. Chris Murphy, D-Conn., and Rep. Mike Levin, D-Calif., are leading the effort to rein in prediction markets. Speaking to Reuters, Levin stated that wagers on military strikes likely run afoul of the Commodity Exchange Act, which bans contracts deemed “contrary to the public interest.”
“Chris Murphy and I are working on this,” Levin said, according to a Wired news post. “It’s unbelievably clear to me that if anyone is using prior knowledge of military action for financial gain, that should be absolutely illegal. There is no good way for people to be betting on war and death.”
Levin’s concerns are echoed in a formal push by a coalition of Senate Democrats, including Sens. Adam Schiff and Richard Blumenthal. In a letter to the CFTC, the group urged regulators to explicitly ban “death-linked” contracts, arguing that allowing wagers on physical harm or mission failures—such as the potential explosion of a NASA launch—creates “perverse incentives” and poses a direct threat to national security.
As recently as last Wednesday, Polymarket hosted a market on the likelihood of a nuclear explosion anywhere in the world. The market was removed following public backlash. While Murphy and Levin hope to build a bipartisan coalition, political headwinds make the bill’s passage unlikely during this session.
Trump administration ties create regulatory shield
The Democratic duo faces an uphill battle given the deep connections between the Trump administration and the prediction market industry. Donald Trump Jr. serves as an adviser to both Kalshi and Polymarket, and his venture capital firm, 1789 Capital, holds equity in the latter.
Shortly after President Trump assumed office in 2025, the Department of Justice issued declination notices on government lawsuits against Polymarket that originated during the Biden administration. Additionally, Trump Media & Technology Group recently announced plans to launch its own crypto-based platform, “Truth Predict.”
Should the bill pass both chambers, it would almost certainly face a presidential veto.
CFTC’s Selig vows to fight “onslaught” of lawsuits
Prediction market platforms maintain they are not gambling outlets, but critics argue they exploit a legal loophole by labeling wagers as “event contracts” to avoid traditional regulation.
The Commodity Futures Trading Commission (CFTC) maintains jurisdiction over these trades, but Trump’s appointed CFTC Chairman, Michael Selig, has remained defiant against what he calls an “onslaught” of litigation. In a video released on X in February, Selig issued a blunt warning to those challenging the current regulatory hands-off approach: “To those who seek to challenge our authority in this space, let me be clear — we will see you in court.”
