New Legislation Targets Crypto Prediction Markets
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Introduction of the DEATH BETS Act
On March 10, a significant legislative proposal emerged from California’s Democratic U.S. Senator Adam Schiff and Representative Mike Levin (CA-49). The DEATH BETS Act aims to prohibit prediction market contracts related to terrorism, assassination, war, or an individual’s death on platforms registered with the Commodity Futures Trading Commission (CFTC). This proposed legislation would impact regulated venues such as Kalshi and Polymarket’s newly licensed U.S. branch, along with other designated contract markets (DCMs) that offer event contracts through brokers.
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Currently, the Commodity Exchange Act empowers the CFTC to block contracts linked to terrorism, war, or assassination if they are considered “contrary to the public interest.” Schiff’s bill seeks to remove this discretion, arguing that the CFTC, under Chair Mike Selig’s leadership, should not have the leeway to revise prediction-market regulations. Schiff stated, “The DEATH BETS Act will categorically ban these contracts, eliminating the CFTC’s discretionary power.”
Impact on the Cryptocurrency Sector
The proposed legislation comes on the heels of pressure from Senate Democrats urging the CFTC to “halt prediction contracts involving bets on physical injury, death, or war.” A letter sent to Chair Michael Selig on February 23 highlighted Polymarket’s on-chain “dangerous prediction contracts,” including whether the Artemis II mission would explode, if Nicolás Maduro would be ousted from power in Venezuela, and whether Ukraine’s Myrnohrad would be captured by Russian forces.
The “Wild West” of Prediction Markets
Senator Schiff described prediction markets as resembling “the Wild West,” emphasizing, “There is no justification for betting on human lives, nor any public benefit from such markets. With regulatory oversight lacking, prediction markets have rapidly devolved into chaos.”
The Iran conflict has become a focal point, with Schiff’s office pointing out a $54 million trading volume on Kalshi over a bet on whether Iran’s Ali Khamenei would lose his position as Supreme Leader before being paused. Significant amounts have been wagered on Iran-related events, with reports indicating that 10 wallets profited $1.2 to $1.4 million just before U.S. military strikes.
Representative Levin highlighted the need to prevent profit from the outbreak of war or the deaths of American service members, stating, “Over half a billion dollars was wagered on the timing of U.S. military strikes on Iran alone. This is unacceptable, and our legislation will put an end to it.”
Implications of the DEATH BETS Act for Traders
If enacted, the DEATH BETS Act will likely make CFTC-supervised platforms safer yet more restrictive, pushing riskier war and death-related trading into offshore or unregulated crypto venues, thereby increasing legal and reputational risks. While betting on elections, inflation, and macroeconomic data will remain permissible, Washington seeks to delineate boundaries on wagering with human lives.
The DEATH BETS Act does not outlaw crypto prediction markets altogether but signals that future regulatory battles in the cryptocurrency space will extend beyond Bitcoin or ETFs. They will encompass broader discussions on the ethical bounds of what the industry allows people to bet on.
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