U.S. lawmakers proposed the DEATH BETS Act, a legislation bill explicitly banning prediction market contracts tied to war, assassination, terrorism, and death.a
The bill amends the Commodity Exchange Act to prohibit any Commodity Futures Trading Commission (CFTC) registered exchange from listing or offering such contracts. the ban covers contracts that closely correlate with a person’s death, war, or assassination.
Bill overpowering the CFTC
This removes the CFTC’s current discretion under the Commodity Exchange Act, where the agency can block war, terrorism, or assassination contracts only if it finds them contrary to the public interest, if identified as a public threat, which means that rules can change in respect to leadership of the CFTC.
The move comes after, over $500 million was wagered on the timing of recent U.S. and Israeli military strikes on Iran. On Kalshi, a single market on whether Iranian Supreme Leader Ali Khamenei would be out as leader saw $54 million in volume before being paused following reports of his death.
Meanwhile, offshore sites like Polymarket hosted even more controversial bets, including the capture of the Ukrainian town Myrnohrad and even the potential for a nuclear detonation.
National security concerns and insider trading risks
Lawmakers argue these markets create perverse incentives that threaten national security. Senator Schiff warned that insiders can profit off classified information, citing reports that a handful of anonymous traders, including one new user who profited $128,000, netted in millions just hours before strikes in the Middle East began.
The proposal directly challenges the CFTC’s ongoing shift toward looser regulation of event-based prediction markets under Chair Mike Selig, who has indicated plans to rewrite rules and recently withdrew a 2024 broad ban on political betting, criticizing it as overreach while preparing new guidance for event contracts. Schiff’s bill strips away this flexibility, making the ban unequivocal and statutory as the agency moves in a more permissive direction.
While industry supporters argue that these markets give valuable geopolitical information, by introducing the bill, Schiff is preventing financialization of violence.
The DEATH BETS Act arrives as prediction markets have seen explosive growth in event-based trading, but lawmakers argue these specific categories pose unique ethical, security, and moral risks by incentivizing harm or exploiting tragedy.
