Democrats Introduce Bill to Ban Prediction Market Contracts on War and Death

Two Democratic lawmakers introduced legislation on Tuesday to ban prediction market contracts tied to war, death, and assassination, even as the CFTC announced plans to expand the regulatory framework governing the sector.

Rep. Mike Levin (CA-49) and Sen. Adam Schiff (D-Calif.) unveiled the Discouraging Exploitative Assassination, Tragedy, and Harm Betting in Event Trading Systems Act, or the DEATH BETS Act. 

The bicameral bill seeks to amend the Commodity Exchange Act to explicitly prohibit any CFTC-registered entity from listing contracts that involve, relate to, or reference terrorism, assassination, war, or an individual’s death.

“Over half a billion dollars was wagered on the timing of U.S. military strikes on Iran alone,” Levin said in a statement.”That is unacceptable, and this legislation puts a stop to it.”

The bill arrives as prediction markets face mounting criticism over contracts tied to geopolitical conflict, political violence, and the fate of world leaders. 

Under current law, the Commission has discretion to prohibit such contracts only if it determines they run contrary to the public interest.

The DEATH BETS Act would remove that discretion entirely, codifying a ban regardless of who chairs the agency.

Speaking on Monday at the FIA Global Cleared Markets Conference in Boca Raton, Florida, CFTC Chairman Michael Selig announced he had directed staff to draft guidance on how event contracts may be listed and traded, saying he would launch an advanced notice of proposed rulemaking to solicit public input on the sector. 

Calling the U.S. the “crypto capital of the world,” Selig said prediction markets are “now viewed by the public as more accurate than political polls” and that the agency is “no longer going to sit idly while these markets develop within our framework.”

Last month, in a letter spearheaded by Schiff and co-signed by Senators Catherine Cortez Masto, Richard Blumenthal, Cory Booker, Tim Kaine, and Jacky Rosen, the group urged the Selig to “clearly reiterate” that his agency would prohibit any contract that resolves upon or closely correlates to an individual’s death. 

“These contracts present dangerous national security risks, including creating incentives to incite violence, foment geopolitical conflicts, and disclose classified information,” the senators wrote.

The letter cited Polymarket markets centred on whether the Artemis II spacecraft would explode, Venezuela’s Nicolás Maduro’s removal from power, which netted one trader more than $400,000, and Russia capturing the Ukrainian town of Myrnohad, where bettors reportedly earned returns of up to 33,000%. 

Last week, Polymarket pulled a nuclear detonation market that had attracted more than $838,000 in volume after widespread backlash, having posted a 22% probability of a nuclear weapon being detonated by year-end.

Meanwhile, prediction market Kalshi is facing a class action lawsuit over its handling of a market on whether Iran’s Ayatollah Ali Khamenei would leave office. 

Plaintiffs say the platform shortchanged winning bets by applying a “death carveout” clause that prevented the market from resolving with a full payout after his death.

Decrypt has reached out to CFTC for comment.