TLDR
- California Senator Adam Schiff unveiled the DEATH BETS Act targeting prediction market contracts related to armed conflict, terrorist activity, political assassination, and mortality
- The proposed legislation would establish permanent federal prohibitions, eliminating regulatory discretion from the CFTC
- Congressional Representative Mike Levin highlighted that betting volume exceeded $500 million on when U.S. forces would strike Iran
- Connecticut Senator Richard Blumenthal put forward companion legislation addressing fraudulent activity and insider dealing in prediction markets
- Blumenthal’s proposal would restore certain regulatory authority to state governments
Congressional Democrats are launching a legislative offensive against prediction markets through two separate bills designed to prohibit wagering contracts connected to military operations, mortality, and armed conflicts.
California’s Senator Adam Schiff put forward the DEATH BETS Act on March 11. The proposed law would prohibit any exchange registered with the CFTC from offering contracts related to acts of terrorism, military conflicts, political assassinations, or individual mortality.
The legislative measure would directly modify the Commodity Exchange Act. This approach ensures the prohibition becomes codified law instead of remaining subject to regulatory interpretation.
Currently, the Commodity Futures Trading Commission maintains authority to determine if particular contracts violate “public interest” standards. However, such determinations vary based on the commission’s leadership.
CFTC Chairman Mike Selig, appointed in December, has demonstrated openness toward prediction markets. Schiff’s legislative proposal would eliminate that discretionary power from both Selig and subsequent chairpersons.
California Representative Mike Levin filed a matching version of the legislation in the House of Representatives. This dual introduction creates a bicameral legislative push.
Levin highlighted the magnitude of the issue in his public remarks. He noted that wagers exceeding half a billion dollars were placed solely on predictions about U.S. military strike timing against Iran.
“That is unacceptable, and this legislation puts a stop to it,” Levin said.
Schiff Says National Security Is at Risk
Schiff contended that permitting wagering on warfare and fatalities establishes opportunities for individuals with privileged access to profit from sensitive government information. He stated this arrangement jeopardizes national security and potentially incentivizes violent acts.
“There is no justification for gambling on lives, or public benefit to be derived by such a market,” Schiff said in a statement.
The legislative language establishes comprehensive enforcement parameters. It would prohibit contracts that directly involve or demonstrate strong correlation to human mortality.
This expansive framework aims to prevent trading platforms from exploiting loopholes to offer comparable products under alternative classifications.
Blumenthal Targets Fraud and Insider Trading
That same day, Connecticut’s Senator Richard Blumenthal unveiled separate legislation. The Prediction Markets Security and Integrity Act concentrates on fraudulent practices, insider information exploitation, and market manipulation tactics.
Blumenthal characterized the prediction market sector as “out of control.” He stated his legislative proposal would establish “basic guardrails and safeguards” for the industry.
His bill similarly adopts Schiff’s framework by prohibiting contracts connected to military action, mortality, and armed conflicts.
A notable distinction involves Blumenthal’s measure restoring certain regulatory powers to state authorities. This provision contradicts CFTC Chairman Selig’s recent efforts to establish exclusive federal jurisdiction over prediction market oversight.
These two legislative proposals signal an intensifying Democratic campaign to regulate a rapidly expanding sector. Prediction markets captured widespread public awareness throughout the 2024 electoral season and have maintained growth momentum.
Blumenthal stated his legislation “bans dangerous and unethical bets and protects consumers from fraud and other predatory practices.”
Both legislative measures were filed on March 11 and must advance through committee review before reaching floor votes in their respective chambers.
