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A new proposal in Washington aims to restrict certain prediction market contracts tied to violent events and personal deaths. Lawmakers in both chambers of Congress want clearer federal rules after several controversial markets appeared on regulated platforms.
Good to Know
New legislation introduced by Adam Schiff targets prediction market contracts connected to violent events or the death of a person. The measure, known as the DEATH BETS Act, aims to prohibit regulated exchanges from offering such markets.
According to the proposal, any exchange operating under oversight from the Commodity Futures Trading Commission would not be allowed to list contracts referencing terrorism, assassination, war, or the death of an individual.
Supporters of the measure say existing authority allows regulators to intervene when markets conflict with public interest. However, lawmakers believe current law leaves too much discretion to the CFTC and want explicit statutory limits.
Senator Schiff said:
“Betting on war and death creates an environment in which insiders can profit off of nonpublic information, our national security is jeopardized, and violence is encouraged. Congress must act.”
Companion legislation will appear in the House through Mike Levin, who plans to introduce a parallel version of the bill.
Concerns from lawmakers intensified after several prediction market contracts tied to geopolitical events drew attention. Some markets allowed users to speculate on outcomes involving political leadership or conflict scenarios.
One example cited by Schiff office involved a market tied to the possible removal of the Supreme Leader of Iran. The contract reportedly generated tens of millions of dollars in trading activity before trading stopped.
Prediction markets operate similarly to financial exchanges where traders buy and sell contracts tied to real world outcomes. In recent years, regulated platforms under CFTC oversight have expanded into political, economic, and event based forecasting.