Senator Murphy plans to introduce legislation to restrict betting on war-related prediction markets, raising regulatory concerns over insider trading profits on Polymarket

On March 6, Senator Chris Murphy announced plans to introduce legislation restricting public betting on prediction markets related to government military actions and official policy decisions. Murphy pointed out that recent traders have profited from related contracts before the U.S. and Israel airstrikes on Iran, raising concerns about insider trading risks.

On-chain data shows that blockchain analytics firm Bubblemaps identified six recently funded wallets linked to an airstrike contract on Polymarket. These wallets collectively gained approximately $989,000. The largest wallet converted a $60,800 position into a $494,000 profit, with the trade occurring hours before the military action. Another wallet named “Planktonbets” made about $174,000 profit across seven trades, while the “Dicedicedice” wallet earned about $119,000 in a single trade. Murphy stated on X that such profits may stem from individuals with insider information.

The proposed bill would ban market trading related to war or political speeches but would exempt financial contracts such as Federal Reserve policy decisions. Representative Mike Levin is also pushing a companion bill in the House, noting that Polymarket user “Magamyman” profited about $515,000 less than two hours before the attack was publicly announced.

Insider trading in prediction markets has recently attracted regulatory attention. Israeli prosecutors recently charged a reservist and a civilian with using confidential intelligence to bet on the timing of Iran’s attack. Despite increased regulation, market trading volume continues to grow. Data shows Kalshi’s February trading volume reached $10.4 billion, while Polymarket’s was about $7.9 billion, totaling approximately $18.3 billion.

Analysts believe that such legislation aims to preserve market integrity, prevent the misuse of sensitive information, and balance the legitimate financial functions of prediction markets. Bipartisan lawmakers emphasize that increased regulation can help prevent geopolitical betting from posing risks to national security and public confidence.