Democrats Propose Legislation to Prohibit Prediction Market Agreements Involving War and Mortality

Lawmakers Propose Ban on Betting Markets Linked to Violence and Death

On Tuesday, two Democratic members of Congress introduced a bill aimed at outlawing prediction market contracts that involve topics such as war, assassination, and death. This move comes as the Commodity Futures Trading Commission (CFTC) considers expanding its oversight of these markets.

Representative Mike Levin (CA-49) and Senator Adam Schiff (D-Calif.) presented the Discouraging Exploitative Assassination, Tragedy, and Harm Betting in Event Trading Systems Act, also known as the DEATH BETS Act.

This bipartisan legislation seeks to revise the Commodity Exchange Act, making it illegal for any CFTC-regulated entity to offer contracts that reference or are connected to terrorism, assassination, warfare, or the death of individuals.

“Over $500 million was gambled on the timing of U.S. military actions against Iran alone,” Levin stated. “That is unacceptable, and this bill will put an end to such practices.”

The introduction of this bill follows increasing criticism of prediction markets that allow bets on global conflicts, political violence, and the lives of world leaders.

Currently, the CFTC has the authority to block these types of contracts only if they are deemed against the public interest.

If enacted, the DEATH BETS Act would remove this discretionary power, establishing a permanent prohibition regardless of who leads the agency.

During the FIA Global Cleared Markets Conference in Boca Raton, Florida, CFTC Chairman Michael Selig announced on Monday that he has instructed staff to prepare new guidelines for listing and trading event contracts. He also revealed plans to seek public feedback through an advanced notice of proposed rulemaking.

Selig described the United States as the "crypto capital of the world," noting that prediction markets are now considered by many to be more reliable than political polling. He emphasized that the agency will no longer remain passive as these markets evolve within its jurisdiction.

Last month, Senator Schiff, along with Senators Catherine Cortez Masto, Richard Blumenthal, Cory Booker, Tim Kaine, and Jacky Rosen, sent a letter urging Selig to make it clear that the CFTC would ban any contract that is resolved by or closely tied to an individual's death.

“These types of contracts pose serious national security threats, including the risk of encouraging violence, escalating international tensions, and leaking sensitive information,” the senators wrote.

Recent Developments in Prediction Markets

Just last week, Polymarket removed a market on the likelihood of a nuclear detonation, which had seen over $838,000 in bets, after facing significant public criticism. The market had suggested a 22% chance of a nuclear weapon being used by the end of the year.

At the same time, the prediction market platform Kalshi is being sued in a class action lawsuit over its management of a market concerning whether Iran’s Supreme Leader Ayatollah Ali Khamenei would leave office.

The plaintiffs allege that Kalshi reduced payouts to winning participants by invoking a “death carveout” clause, which prevented full payment after Khamenei’s death.

Decrypt has contacted the CFTC for a response.