Murphy on Tuesday said on his official website that the bicameral legislation amends existing laws against illegal gambling by shutting down payment systems to illegal online platforms and imposing criminal penalties for people in the US who promote, manage, own, or supervise these businesses domestically.

“The opportunities for rigging prediction markets are not limited to government actions and upheaval: any event where insiders know or can control the outcome in advance is ripe for abuse,” the senator said.

Many of the “event contracts” are traded on offshore prediction markets, Murphy said, adding that recent suspicious activity in prediction markets raised serious questions about whether Trump administration insiders are using government secrets to make significant personal profit by placing anonymous bets on these platforms.

“Hours before both the initial strikes on Iran and the extraction of Nicolas Maduro in Venezuela, several prediction market users placed huge bets predicting the strikes and cashed out for hundreds of thousands of dollars,” he added.

The law maker said prediction market CEOs will usher in a new dystopian reality if they succeed in their goal to “financialise everything,” in which everything in our lives is commodified. “The BETS OFF Act would put a stop to these immoral bets and create real consequences for bad actors profiting off of death and corruption.”

Murphy said prediction markets offer powerful government officials a perverse incentive to pursue policies that are in their personal financial interest, cratering public trust.

The bill is co-sponsored by US senator John Hickenlooper and representatives Yassamin Ansari, Gabe Amo and Rashida Tlaib in the House.

BETS OFF Act is also endorsed by: VoteVets, American Economic Liberties Project, Win Without War, Americans for Financial Reform, Public Citizen, Groundwork Collaborative, and Center for International Policy Advocacy.

Meanwhile, Bloomberg on Wednesday reported that Arizona state filed criminal charges against Kalshi for operating an illegal gambling business.

In a statement shared on X, Kalshi said the state-court charges are seriously flawed.

“It's gamesmanship. Four days after Kalshi filed suit in federal court, these charges were filed to circumvent federal court and short-circuit the normal judicial process. These charges are meritless, and we look forward to fighting them in court,” the prediction market said.

The Commodity Futures Trading Commission in March opened a public consultation on prediction markets and issued new staff guidance to exchanges listing event contracts as activity in the sector accelerates.

Speaking on a panel at the FIA BOCA, Terry Duffy, chief executive of CME Group, said: “I think it’s a very difficult situation right now and there needs to be some clarity… the best way for prediction markets, crypto or anything like that to grow is you start to get some good, solid regulation around them that is sustainable through multiple administrations.”