Congress bill would ban prediction markets tied to violence

Rep. Mike Levin and Sen. Adam Schiff introduced the bicameral ‘Discouraging Exploitative Assassination, Tragedy, and Harm Betting in Event Trading Systems Act,’ known as the Death Bets Act, in Congress on Tuesday. The bill would make certain event-based prediction contracts illegal nationwide.

The legislation would explicitly ban contracts that allow traders to place wagers on violent or deadly outcomes, including war, terrorism, assassination and individual deaths. It would remove the Commodity Futures Trading Commission’s current discretion to block such contracts under the Commodity Exchange Act and replace that discretion with a statutory prohibition.

Levin said lawmakers must act because gaps in current law allow traders to profit from violent events. Schiff warned that markets tied to violent events could enable insiders to profit from sensitive information and encourage violence.

Under existing law, the CFTC can determine that contracts tied to war, terrorism or assassination are against the public interest and block them, but the decision rests with the agency. CFTC Chairman Michael Selig has said the agency is preparing new guidance and an advanced rulemaking process to clarify how prediction markets should operate under U.S. rules and that combining prediction markets with blockchains could help address disinformation concerns.

The Death Bets Act follows other congressional proposals targeting prediction markets. Earlier this month, senators introduced draft legislation that would bar the president, vice president, members of Congress and certain other officials from trading event contracts.

Prediction-market platforms have removed controversial contracts after public criticism. One platform removed a market that let users bet on the likelihood of a nuclear weapon detonation. Onchain analytics firm Bubblemaps flagged newly created crypto wallets that together earned roughly $1 million by wagering that the U.S. would launch military strikes against Iran shortly before such strikes occurred, an allegation that drew insider-trading concerns.

Prediction-market operators also face enforcement actions from multiple states under gambling laws. In a recent federal ruling in a dispute involving a prediction-market exchange and Ohio regulators, a judge declined to grant a preliminary injunction and found no historical evidence that the Commodity Exchange Act preempts state gambling statutes, leaving state enforcement authority intact for now.

Sponsors said the bill is designed to close legal gaps they view as allowing markets to create perverse incentives tied to violence and to reduce the risk that classified or sensitive information could be used for profit.