Prediction markets are facing renewed scrutiny from federal lawmakers after wagers about the fate of Iranian leader Ayatollah Ali Khamenei, who was killed in the Saturday bombardment of Iran.

“It’s insane this is legal,” said Sen. Chris Murphy, D-Conn., in a post to X, referring to another post highlighting people who had made money on the invasion.

“People around Trump are profiting off war and death. I’m introducing legislation ASAP to ban this.”

Murphy’s post replied to a tweet that said six “suspected insiders” made $1.2 million betting on a U.S. strike on Iran on the prediction site Polymarket.

CNBC has reached out to Murphy’s office for more details on his proposal.

Murphy’s criticism comes a week after six other Democratic senators, led by Adam Schiff of California, told the Commodity Futures Trading Commission they had serious concerns with prediction market contracts “that incentivize physical injury or death,” saying the contracts “present dangerous national security risks.”

The letter pointed to recent contracts on Polymarket, including ones related to the possible explosion of a NASA spaceship launch, the fate of Venezuela’s authoritarian leader, and Russia’s invasion of Ukraine.

“Gambling on war and death doesn’t just present national security risks, it also raises serious concerns about potential insider trading — presenting unscrupulous government officials with a chance to profit off the new war in Iran,” Schiff said in a post on X on Monday.

“These contracts are immoral. @CFTC can and must ban them.”

Other lawmakers, too, have expressed concern about prediction markets after the invasion. Rep. Mike Levin, D-Calif., said on X that “[p]rediction markets cannot be a vehicle for profiting off advance knowledge of military action.”

“We need answers, transparency, and oversight,” Levin said.

The controversy comes as a new trade group led by President Donald Trump’s former acting Chief of Staff Mick Mulvaney, Gambling Is Not Investing, launched to push tighter guardrails on prediction markets.

Gambling Is Not Investing takes aim at another key market in the prediction space, markets on sports.

Many states in recent years have labored to pass sports betting laws, tapping massive tax revenues from wagers to balance their budgets. Some states now argue that prediction markets, which are federally regulated by the Commodity Futures Trading Commission and often offer betting lines on outcomes in sporting events, are encroaching on their regulated sportsbooks.

“Gambling products — regardless of what you call them — must follow established state and tribal laws,” Mulvaney said.

“Rebranding sports wagering as ‘trading’ or ‘investing’ or ‘predicting’ misleads consumers, undermines responsible gaming protections, and weakens the state and tribal systems built to protect the public and fund vital community services.”

The prediction market Kalshi, in a comment to CNBC, said it “doesn’t allow markets directly tied to death,” regarding betting lines over whether Khamenei would be out of power that have received criticism. The company issued refunds on the market, citing regulations barring wagers on death.

“We included every precaution on this market to make sure people could not trade on the outcome of death,” the company said. “Our rules were clear from the beginning, we never changed them, and we settled based on the rules. We reimbursed all fees and net losses because we thought the UX could have been clearer for users.”

Kalshi CEO Tarek Mansour also responded to Murphy directly in a separate post, saying “regulated prediction markets are not allowed to do war markets.”

“The market you’re posting is unregulated and offshore,” Mansour said.

Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.