House Democrats are pressing Commodity Futures Trading Commission Chair Michael Selig over offshore prediction market contracts tied to war and other government actions.
Their letter, made public on April 7, asks what the agency can do to stop platforms outside the United States from offering those markets and requests a response by April 15.
The push adds to a broader debate around prediction markets as platforms such as Kalshi and Polymarket draw more attention from lawmakers, regulators, and sports groups.
The latest concern follows contracts linked to U.S. military operations and rescue efforts in Iran, which brought fresh scrutiny to whether such markets should be allowed at all.
Democrats press CFTC over offshore war bets
A group of House Democrats led by Representatives Seth Moulton and Jim McGovern sent the letter to Selig asking why the CFTC has not taken stronger action against offshore prediction market bets involving war and other government activity.
The lawmakers said some recent contracts appeared to conflict with U.S. law and raised questions about whether the commission is doing enough to police fast-growing event markets.
The letter came after weekend attention on contracts tied to the rescue of American airmen in Iran. In an April 3 X post, Moulton had also criticized Polymarket in late March over contracts related to when downed U.S. fighter jet pilots in Iran would be rescued.
Polymarket later said it removed that market and was reviewing how it passed internal safeguards. In addition, McGovern used strong language in his statement on the issue.
”There is something deeply sick about turning war into a gambling opportunity. We’re talking about people betting on bombings, bloodshed, and military action as if human lives are just numbers on a screen.” McGovern noted, ”These are not harmless wagers.”
The lawmakers also tied their concerns to other recent prediction market activity. They pointed to bets around the ouster of Venezuelan President Nicolás Maduro and U.S. military action involving Iran, saying such activity has fed concern about insider trading and access to nonpublic government information.
Reuters separately reported on April 2 that Democratic Senators Mark Warner and Adam Schiff had raised similar concerns with federal watchdogs over unusually timed trades tied to government actions.
Lawmakers cite CFTC rules on war-linked contracts
The Democrats’ letter pointed to the CFTC’s own event contract rules. Under CFTC Regulation 40.11, event contracts are prohibited if they involve, relate to, or reference terrorism, assassination, war, gaming, or activities unlawful under state or federal law.
The rule is now central to the lawmakers’ argument that the commission already has tools it can use. The CFTC has also been actively reviewing how broadly those restrictions should apply.
In a March 13 federal register notice, the agency asked for comment on how the term “war” should be understood in event contracts and whether some military actions should be treated differently.
In their letter, the House Democrats argued that offshore status should not stop the CFTC from acting when contracts connect back to U.S. commerce.
They said the spread of event contracts that appear to conflict with U.S. law is concerning and urged the agency to consider enforcement steps even when some of the most visible trades occur outside the country.
The lawmakers also asked whether the CFTC believes it has authority to police insider trading in prediction markets and whether it has examined possible conflicts involving major market participants and family members of executive branch officials.
Prediction markets face pressure from Congress and sports leagues
The letter arrived as prediction markets continue to expand in visibility. Kalshi operates in the United States and says it bans contracts on topics such as war while remaining under CFTC oversight.
Polymarket is offshore, though it remains accessible in limited ways to U.S. users and has been the venue for several contracts that drew political backlash.
Congress has already started moving on related proposals. Senator Adam Schiff’s office recently promoted bipartisan legislation aimed at banning sports prediction market contracts, while other Democrats have pushed for tighter rules around contracts tied to physical harm, death, war, and government actions.
Sports leagues have also entered the debate. As we reported on March 30, The NFL asked Kalshi and Polymarket not to list contracts tied to events that can be easily manipulated or known in advance.
Those included certain sports-related outcomes, broadcast moments, and other situations where integrity concerns could arise.
Selig, however, has continued to frame prediction markets as a space the United States should not lose to offshore operators.
”As Ronald Reagan once said, ‘If we lose freedom here, there is no place to escape to,’ and it’s the same for our markets. If we miss the opportunity to create a space for prediction markets to grow and flourish here, then we risk ceding these markets to the central planners in offshore markets. As Chairman of the CFTC, I won’t let us miss this moment,” he said, in a recent X post.
He also said the agency is trying to balance market development with enforcement.
”At the CFTC, we’re working to encourage innovation in our financial markets while protecting the integrity of markets at the same time,” Selig wrote, in another post.
He added that partnerships with sports leagues such as Major League Baseball would help the agency prevent insider trading, protect fair markets, and allow prediction markets to continue developing.
Selig faces competing pressure on oversight
At the same time, federal authorities have taken a different line in court on the scope of CFTC oversight. On April 2, the federal government sued Arizona, Connecticut, and Illinois over their efforts to regulate prediction markets, arguing that the CFTC has exclusive authority over these markets under federal law.
The disputes involve state efforts aimed at firms including Kalshi, Polymarket, Crypto.com, and Robinhood. That means the same federal government now taking states to court over prediction market regulation is also facing calls from lawmakers to act more aggressively against certain contracts.
The CFTC is defending broad federal control over these markets while also being asked why it has not used that control more forcefully against offshore contracts tied to war and other sensitive subjects.
That split became clearer on April 6, when the 3rd U.S. Circuit Court of Appeals ruled that New Jersey regulators could not block Kalshi from offering sports-related event contracts because those contracts fall under CFTC authority.
The story shows the pressure on the CFTC is growing from several directions at once. Lawmakers want tougher action on sensitive contracts, while the agency is still defending its broader authority over prediction markets.