A group of US lawmakers has introduced legislation seeking a nationwide ban on prediction market contracts linked to war, terrorism, assassinations, and individual deaths. The draft legislation, titled the DEATH BETS Act, represents the most direct effort so far to restrict speculative trading on violent real-world events through regulated exchanges.
Legislation Aims For Clear-Cut Rules On Violent Event Contracts
The DEATH BETS Act was presented by Rep. Mike Levin and Sen. Adam Schiff. Both currently serve in Congress and are known for their focus on financial regulatory reforms. The text of the proposal calls for a blanket prohibition, preventing any exchange registered with the Commodity Futures Trading Commission (CFTC) from listing or clearing contracts that derive value from wars, terrorism incidents, targeted killings, or any individual’s demise.
This legislative push follows concerns that existing regulatory oversight provides too much leeway. Under the Commodity Exchange Act, the CFTC already has the authority to refuse certain contracts, but that responsibility hinges on subjective public interest standards—creating what legislators say are loopholes.
Supporters of the new bill maintain that an explicit statutory ban is necessary to close what they view as problematic gray areas. With this measure, they assert that regulatory agencies would have unambiguous directions, removing discretion and ambiguity for certain categories of event-linked trading.
Controversy Over Geopolitical Prediction Markets Intensifies
Increasing attention on prediction markets coincided with a surge in high-stakes trading around recent geopolitical developments. On platforms like Polymarket and Kalshi, large volumes have been recorded on contracts tied to the likelihood of military strikes, regime changes, or deaths of key political figures.
Polymarket, a decentralized prediction market run on blockchain technology, enables users to trade shares in possible future events. Kalshi operates under CFTC supervision, offering event contracts structured similarly to binary options. These platforms allow traders to speculate on real-world outcomes, often drawing high liquidity during global crises.
In one instance, a contract on Polymarket reportedly saw over $500 million in wagers regarding the timing of US military action against Iran. Rep. Levin pointed directly to this figure as evidence of the scale and sensitivity of such prediction markets.
Further scrutiny developed after reports surfaced of possible insider trading, where several accounts collectively earned over $1.2 million from knowledge presumed unavailable to the wider public. Senator Schiff expressed concerns that such markets incentivize exploitation of nonpublic information and could jeopardize national security.
Kalshi became the subject of debate after hosting a prediction contract on whether Iran’s Supreme Leader Ali Khamenei would remain in power by a set date. Trading volume for this market reached around $54 million before activity was halted. Other platforms carried contracts focused on events like potential changes in the Venezuelan leadership or military outcomes in Ukraine.
Rep. Levin stated, “With over $500 million wagered on military strike timing, the recent Iran-related markets show why urgent action is needed to draw bright lines on what types of real-world events can be turned into financial speculation.”
Several of these controversial contracts were later withdrawn after public and legislative backlash. Lawmakers assert the examples demonstrate how prediction markets can turn sensitive live events into tradable financial instruments, raising ethical and legal questions about the proper limits of such markets as they continue to expand.
