Sen. Chris Murphy (D-Connecticut) speaks next to guest Fereshteh Ganjabi, an Afghan refugee and founder of Elena’s Right, at a State of the Union event prior to President Trump’s State of the Union address in Washington, DC, on February 24, 2026.
Elizabeth Franz | Reuters
Prediction markets are facing new scrutiny from federal lawmakers following bets on the fate of Iranian leader Ayatollah Khamenei, who was killed in Saturday’s airstrike.
“It’s insane that this is legal,” Sen. Chris Murphy, D-Connecticut, said in a post on X, referring to another post featuring people who made money from the invasion. “Those around Trump are profiting from war and death, and I will urgently introduce legislation to ban this.”
CNBC has contacted Murphy’s office for more information about his proposal.
The move comes as a new trade group called Gambling Is Not an Investment, led by President Donald Trump’s former acting chief of staff Mick Mulvaney, was launched to strengthen guardrails for prediction markets.
Other lawmakers have also expressed concerns about post-invasion prediction markets. “Prediction markets cannot be used to profit from advance knowledge of military actions,” Rep. Mike Levin, D-Calif., said in X.
“We need answers, we need transparency, we need oversight,” Levin said.
A new industry association, Gambling is Not an Investment, has set its sights on another major market in the forecasting sector: the sports market.
In recent years, many states have worked hard to pass sports betting laws and use the huge tax revenues from wagers to balance their budgets. Some states are now federally regulated by the Commodity Futures Trading Commission and have argued that prediction markets, which often offer betting lines on the outcome of sporting events, infringe on regulated sportsbooks.
“Gambling products, no matter what you call them, must follow established state and tribal laws,” Mulvaney said. “Rebranding sports betting as ‘trading,’ ‘investing,’ or ‘predicting’ misleads consumers, undermines protections for responsible gaming, and undermines state and tribal systems built to protect the public and fund critical community services.”
“We do not accept a market that will lead directly to death,” Karsi said in comments to CNBC, referring to the much-criticized gambling over whether Ayatollah Khamenei will lose power. The company issued a refund on the market, citing regulations prohibiting bets on death.
“We have taken every precaution in this market to prevent people from trading based on the outcome of death,” the company said. “Our rules were clear from the beginning, we never changed them, and we settled on them. We compensated for all fees and net losses because we thought the UX could have been clearer for our users.”
Karshi CEO Tarek Mansour also responded directly to Murphy in a separate post, saying, “Regulated prediction markets are not allowed to conduct war markets.”
“The market you are listing on is unregulated and offshore,” Mansour said.
NPR reported that a user named “Magamyman” cashed out $553,000 on Polymarket, another prediction market that is not yet operational in the United States.
Disclosure: CNBC and Kalsi have a commercial relationship that includes customer acquisition and minority ownership.
