Democrats push 'Death Bets Act' to ban prediction markets tied to war and fatalities

Two Democratic lawmakers have introduced new legislation seeking to ban prediction market contracts tied to death, war, and assassination, arguing that such bets pose national security and ethical risks as event-based prediction platforms gain prominence.

On Tuesday, Rep. Mike Levin and Sen. Adam Schiff announced the bicameral bill, titled "Discouraging Exploitative Assassination, Tragedy, and Harm Betting in Event Trading Systems Act," or the "Death Bets Act."

"Betting on war and death should be illegal," Levin said in a statement, adding that gaps in current law allow traders to profit from violent events.

Schiff echoed the concerns, warning that markets tied to violent events could create incentives for insiders to profit from sensitive information. 

"Betting on war and death creates an environment in which insiders can profit off of classified information, our national security is jeopardized, and violence is encouraged," said Schiff, who added that prediction markets have become the new "Wild West" in the absence of stronger regulatory guardrails.

Closing gaps

Under the Commodity Exchange Act, the Commodity Futures Trading Commission has the authority to block contracts tied to war, terrorism, or assassination if the agency determines they are against the public interest. 

While the final decision is at the agency's discretion, the lawmakers backing the Death Bets Act suggested that such flexibility is no longer sufficient. The proposed legislation would remove that discretion by explicitly banning such contracts altogether.

The bill comes as the CFTC is reviewing its approach to event-based prediction markets. On Monday, CFTC Chairman Michael Selig said that the agency is preparing new guidance and an advanced rulemaking process to clarify how prediction markets should operate within the U.S. regulatory framework. 

"It's my hope that, by marrying prediction markets with blockchains, we can see how decentralized trust and truth can act as a check on disinformation, outright falsity, and the threat of debanking," Selig said Monday.

The Death Bets Act joins a broader wave of congressional activity on prediction markets. Earlier this month, Senators Jeff Merkley and Amy Klobuchar introduced the "End Prediction Market Corruption Act," which would bar the president, vice president, members of Congress, and other public officials from trading event contracts.

Ongoing legal uncertainty

Outside the legislative efforts, event contracts on sensitive topics involving life-and-death situations have already faced backlash from the public. Last week, Polymarket removed a contract that let users bet on the likelihood of a nuclear weapon detonation due to criticism on social media.

Allegations of insider trading have further fueled concerns regarding prediction markets centered on the ongoing war. Last month, onchain analytics firm Bubblemaps flagged several newly created wallets that collectively earned roughly $1 million by betting that the U.S. would launch military strikes against Iran shortly before the attacks occurred.

Ethical and fairness concerns are heightening the legal instability for prediction markets, which already face enforcement actions from several U.S. states for alleged violations of gambling laws.

In a recent court ruling involving Kalshi and Ohio state regulators, a judge said there is no historical evidence that shows an indication that Congress intended the Commodity Exchange Act to override state gambling laws, rejecting Kalshi's request for a preliminary injunction that sought to block state regulators from enforcing the state laws on the platform.