U.S. Senator Richard Blumenthal has introduced legislation aimed at tightening oversight of prediction markets, proposing new safeguards to address fraud, insider trading, and underage participation on the rapidly growing online platforms.
Blumenthal, alongside Senator Andy Kim, put forward the “Prediction Markets Security and Integrity Act,” which would prohibit individuals and platform operators from using “material, nonpublic information” when wagering on event-based contracts. The proposal would also bar listings that present conflicts of interest and restrict contracts considered susceptible to manipulation or fraud, including those related to war, death, or military action.
The bill would require operators to verify users’ identities, ages, and locations, and would prohibit platforms from targeting or advertising to individuals under 21 as well as people with gambling disorders or addictions. It would also limit the use of artificial intelligence to track individual wagers or target users with promotional offers.
“Prediction markets have become a haven for insider trading, market manipulation, and underage gambling. These billion-dollar businesses are turning war into a casino game and creating a market for national security leaks,” Blumenthal said in a statement.
“My measure – the Prediction Markets Security and Integrity Act – puts guardrails on this out-of-control industry. It bans dangerous and unethical bets and protects consumers from fraud and other predatory practices.”
The legislation defines prediction markets as offering “services that are substantially the same as betting, wagering, gambling and sports gambling,” a characterization that challenges the industry’s position that such platforms function like derivatives exchanges.
The proposal would also prevent prediction markets from operating in a state unless they are authorized under a state wagering program approved by the attorney general, effectively returning regulatory oversight to states.
That approach would clash with the position of the Commodity Futures Trading Commission, which currently oversees derivatives markets and has asserted authority over prediction markets. CFTC Chairman Mike Selig said last month that his agency has “exclusive jurisdiction over these derivative markets.”
“Today, the CFTC is taking an important step to ensure that these markets have a place here in America and have the integrity and resilience and vibrancy that our derivatives markets deserve,” CFTC Chairman Mike Selig said in February. “To those who seek to challenge our authority in this space, let me be clear: We will see you in court.”
Interest in regulating prediction markets has grown in Washington amid concerns about insider trading and wagers tied to geopolitical developments, including predictions related to U.S. military action in Iran.
Other lawmakers have introduced bills to restrict contracts tied to events such as “terrorism, assassination, war, gaming (sports or athletic competitions), or illegal activity,” while a separate proposal would bar federal officials from trading event contracts.
Senator Chris Murphy has also raised concerns about wagers placed shortly before U.S. hostilities in Iran, suggesting individuals with insider knowledge may have profited.
“Nobody should be making bets on if the United States is going to war or what words President Trump is going to use in a speech,” Murphy said.
“Those are fundamentally corrupt markets, because there are people on the inside who know the answer, and it perverts the decision-making process.”
Original article: https://www.yogonet.com/international/news/2026/03/13/118055-us-senator-proposes-bill-to-add-guardrails-to-prediction-markets
