Lawmakers Move to Ban "Death Bets" as Prediction Markets Face Scrutiny Over War and Assassination Contracts

In a direct challenge to the rapidly evolving world of event-based trading, Democratic lawmakers introduced legislation on Tuesday that would outright ban prediction market contracts tied to war, assassination, and death. The move comes just as the top U.S. derivatives regulator signaled its intent to provide more clarity—and potentially more latitude—for the controversial industry.

The "Discouraging Exploitative Assassination, Tragedy, and Harm Betting in Event Trading Systems Act," or the DEATH BETS Act, was unveiled by Representative Mike Levin (D-Calif.) and Senator Adam Schiff (D-Calif.). The bill aims to amend the Commodity Exchange Act to explicitly prohibit any CFTC-registered exchange from listing contracts that involve, relate to, or reference terrorism, assassination, war, or an individual's death.

"We cannot allow financial markets to profit from human suffering and geopolitical instability," Rep. Levin stated. "When over half a billion dollars can be wagered on the timing of military strikes, we have crossed a moral line. This legislation draws a clear boundary."

The legislative push arrives amid growing bipartisan unease over prediction markets that allow users to speculate on dire real-world events. Currently, the Commodity Futures Trading Commission (CFTC) can prohibit such contracts only if it deems them "contrary to the public interest." The DEATH BETS Act would strip away that regulatory discretion, mandating a permanent ban.

This congressional action stands in stark contrast to recent signals from the CFTC itself. Just one day prior, CFTC Chairman Rostin Behnam, speaking at an industry conference, announced that the agency is drafting new guidance on how event contracts may be listed and traded. Behnam noted prediction markets are "increasingly viewed by the public as a source of insightful data" and that the CFTC would not "sit idly by" as the sector develops.

The tension highlights a fundamental debate: are these markets mere tasteless gambling that could incentivize violence, or are they valuable information aggregation tools? A recent letter from Senator Schiff and five colleagues argued the former, warning that such contracts "present dangerous national security risks, including creating incentives to incite violence, foment geopolitical conflicts, and disclose classified information."

The industry is already facing turbulence. Last week, the major platform Polymarket shuttered a market predicting a nuclear detonation by year-end after it attracted over $838,000 in bets and significant public backlash. Another platform, Kalshi, is facing a class-action lawsuit related to its handling of a contract on the tenure of Iran's Supreme Leader, with plaintiffs alleging the platform used a "death carveout" clause to avoid full payouts.

As regulators and lawmakers chart conflicting courses, the future of betting on life-and-death events hangs in the balance.

Voices from the Debate

David Chen, Policy Analyst at the Center for Responsible Finance: "This legislation is a necessary corrective. Markets work best when they channel capital toward productive innovation, not morbid speculation on tragedy. The potential for perverse incentives is too great to ignore."

Marcus Thorne, CEO of a quantitative hedge fund: "It's a heavy-handed solution that misunderstands the technology. These markets surface collective intelligence on geopolitical risk—intelligence that policymakers themselves often lack. Banning them doesn't make the risks go away; it just makes us blinder to them."

Anya Petrova, University Professor of Ethics: "It's grotesque. We're literally creating financial derivatives on human death. The fact that we're even having a debate about 'regulating' instead of 'eliminating' this is a profound moral failure. What's next, a market on the next school shooting?"

Rebecca Shaw, Retail Trader: "I used these markets to hedge my portfolio against geopolitical shocks. The platforms need clearer rules, sure, but a blanket ban throws the baby out with the bathwater. It's another case of Congress being decades behind the technology curve."