- Rep. Blake Moore introduces a bill to ban prediction market trading contracts on election outcomes, war, terrorism and other outcomes.
- He said his bill would close a loophole allowing platforms to get around state anti-gambling laws.
- The bill has bipartisan support but still faces an "uphill climb," according to Moore.
SALT LAKE CITY — As the U.S. and Israel were preparing a joint attack against Iran late last month, traders on online prediction markets wagered millions of dollars on potential military strikes.
When those strikes materialized, kicking off what has turned into more than three weeks of war in the Middle East, some users cashed in.
One anonymous user on Polymarket known as "Magamyman" earned more than half a million dollars after correctly predicting that the U.S. would strike Iran and that Ayatollah Ali Khamenei would be "out as supreme leader of Iran." Khamenei was killed in an airstrike last month.
Those well-placed bets have generated fears of potential insider trading, as well as concerns that prediction markets — which allow users to bet on various outcomes but have avoided state and federal anti-gambling laws because they are regulated as commodity traders — will let betting proliferate on unsavory outcomes, including war, terrorist attacks and assassinations.
Utah Rep. Blake Moore is one of those who has concerns, which is why he introduced a bill earlier this month to ban prediction market trading contracts based on wars, illegal activity, election outcomes, government action and sports betting. But as a father of four young children, Moore is worried about more than just the potential that prediction markets encourage insider trading or influence major world events.
"I have four young boys, 13 and under. I worry that they could potentially have a casino associated with their phone in their pocket, and that terrifies me," the Republican congressman told KSL Wednesday. "At the same time, there could be real manipulation here. It's my understanding that a handful of bets were made about whether or not the U.S. would conduct military operations in Iran, and they made a lot of money off of it. And if they're truly anonymous, what are we doing here? Sincerely, what are we doing as a society?"
Moore's bill, the Event Contract Enforcement Act, is cosponsored by Rep. Salud Carbajal, D-California. The bill prohibits several types of event contracts but allows states to exempt themselves from those regulations, so that residents in states where betting is legal can still participate.
Utah is one of several states that prohibit sports betting, but prediction markets such as Kalshi still allow Utahns to put money on sporting events and other outcomes because it is regulated by the U.S. Commodity Futures Trading Commission, which has pushed back on state efforts to rein them in.
Utah leaders like Gov. Spencer Cox and Attorney General Derek Brown have been outspoken in comparing prediction markets to traditional betting. A state bill cracking down on certain types of sports betting, along with Cox's and Brown's comments, prompted a lawsuit by Kalshi, which argues that efforts to regulate it at the state level violate federal regulations on commodity trading.
Cox signed that bill on Wednesday, saying in a statement that "gambling has no place in Utah."
"We've seen the damage this gambling technology can cause, including addiction and financial loss for individuals and families," he continued. "HB243 ensures proposition bets are treated as gambling under Utah law, bringing clarity to people, communities and law enforcement."
Moore said he first became involved with the issue following Cox's public statements last month and decided to try to tackle the issue at the federal level.
"(If) Utah's elected leaders decide to maintain a no-gambling state, be it online or gaming, then we should have the right to be able to do that," he said. "This is a loophole that could make it so sports betting becomes ubiquitous, and it shouldn't happen if we don't want it there."
Moore isn't the only member of Utah's delegation with plans to regulate prediction markets. Sen. John Curtis introduced a separate bipartisan bill on Monday that would prevent the markets from offering contracts that resemble sports betting or "casino-style" games.
The senator introduced a separate bill on Thursday along with two Democrats and a fellow Republican, which would ban federally elected officials and government employees from using insider information to place bets on prediction markets.
"Public service should not be a pathway to private gain," Curtis stated. "Our bipartisan legislation ensures that insider trading rules apply to prediction markets and removes any ambiguity in how those rules are enforced — underscoring a basic expectation that those entrusted with sensitive information cannot use it for personal profit."
Kalshi didn't respond to a request for comment on Moore's bill but told KSL earlier this week that Curtis' first proposal would incentivize offshore prediction markets and said the bill was "motivated by casino interests that are threatened by competition."
Curtis went on CNBC's "Squawk Box" on Wednesday with his cosponsor, Sen. Adam Schiff, D-California, to discuss the proposal and said he's optimistic that it would get bipartisan support in the Senate.
"This might be a good opportunity to use the prediction markets to bet on that," he said when asked about the bill's backing. "I actually think both of us feel that there's a lot of momentum on both sides of the aisle on this, and I think you're going to see further legislation, not only for us, but from our colleagues on this to get our arms around it and make sure it's done properly."
Moore agreed but acknowledged there's still a lot of work to do.
"This will be tough. This is an uphill climb," he said. "It's just not going to be a simple bill that we can get done in a couple of weeks. It will take some more momentum, but it is definitely getting steam and a lot of attention."
