"I think it's pretty crook to bet against your own team," Prime Minister Julia Gillard told reporters in eastern Sydney on Sunday.
Fairfax newspapers say the Labor figures punting against their party include parliamentary staffers, advisers and senior party officials.
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Centrebet primary analyst Neil Evans was reported as saying: "I can't tell you who, but I can tell you this: these are people very high up."
They were betting on some of the critical seats, he said.
"I can tell you they don't always stay faithful to their party - they swap sides."
The report prompted anti-gambling advocate Nick Xenophon to call on Labor and the coalition to immediately ban party officials from gambling on the federal election.
"How little respect do these individuals have for our democracy?" the South Australian senator said in a statement.
"These people would be privy to all sorts of internal party polling that the average punter knows nothing about."
That inside information was being used by party insiders to personally enrich themselves.
"If that's not corruption, I don't know what is," Senator Xenophon said.
Ms Gillard said governments had dealt with people betting on sporting events of which they had inside knowledge, but there was "some merit" in the senator's call.
The government would look at applying a parallel ban on political parties.
Opposition Leader Tony Abbott, who described himself as "a reluctant banner", said political insiders betting on election outcomes should not be happening.
"I've never had a bet on an election result and I would certainly want to discourage it," he told the Nine Network.
