TLDR
- Two bills were introduced by House Democrats—the Banning Games on Deaths and Elections Act—to prohibit contracts related to elections, armed conflicts, and fatalities on platforms such as Polymarket and Kalshi.
- Senator Adam Schiff and Representative Mike Levin proposed the DEATH BETS Act separately, aiming to restrict identical contract categories through amendments to the Commodity Exchange Act.
- Investigations revealed that individuals with insider knowledge profited significantly—one participant earned $553,000 from a market tied to an Iranian official’s potential assassination.
- Approximately $500 million in wagers were placed on when U.S. military action against Iran would occur, triggering substantial regulatory attention.
- Polymarket processed more than $3.6 billion in wagers throughout the 2024 presidential election season and could encounter heightened oversight from the CFTC and SEC should either legislative proposal advance.
Legislators in Washington are moving to prohibit prediction market contracts centered on fatalities, armed conflicts, and political assassinations. Two distinct legislative proposals introduced this week have the potential to fundamentally alter how platforms such as Polymarket and Kalshi conduct business within American borders.
The Banning Games on Deaths and Elections Act was put forward by House Democrats. This legislative measure would forbid event-based contracts connected to electoral outcomes, military conflicts, and mortality on regulated trading venues. The proposal seeks to modify the Commodity Exchange Act by designating these contract types as “contrary to the public interest.”
This designation represents a criterion the Commodity Futures Trading Commission currently employs to reject contract applications. However, up to this point, no explicit statutory language has supported this authority.
This regulatory ambiguity enabled Kalshi to prevail against the CFTC in litigation last year, securing authorization to offer U.S. election betting markets once again. The proposed legislation seeks to eliminate this regulatory gap.
In a separate legislative effort, Senator Adam Schiff alongside Representative Mike Levin unveiled the DEATH BETS Act—an acronym for Discouraging Exploitative Assassination, Tragedy, and Harm Betting in Event Trading Systems Act. This measure focuses on any CFTC-registered platform providing contracts connected to terrorist activities, political killings, warfare, or individual mortality.
Why Lawmakers Are Acting Now
These legislative efforts emerge following growing concerns regarding insider trading activity on these trading venues. Estimates suggest roughly $500 million in positions were taken on the precise timing of American military operations against Iran.
Investigations demonstrated that individuals with privileged information capitalized on these markets. Reports indicate one participant generated $553,000 in profits from a contract speculating on the potential assassination of Iranian Supreme Leader Khamenei.
Both Polymarket and Kalshi managed their Iran-related markets through different approaches. Kalshi nullified its Supreme Leader contract citing definitional ambiguities in the contract language. Polymarket allowed the market to settle normally, which produced $679 million in contradictory market resolutions and attracted regulatory examination.
Polymarket additionally encountered criticism following the creation of a prediction market concerning the likelihood of nuclear weapon deployment. The company removed the market from public view after facing significant pushback.
What Could Happen Next
The DEATH BETS Act has been assigned to a Senate committee for review. No voting session has been confirmed, and uncertainty remains about whether the legislation will proceed further.
The Banning Games on Deaths and Elections Act encounters opposition from a cryptocurrency-supportive contingent within Congress. Bipartisan backing is currently absent.
Should either legislative proposal clear the committee phase, the CFTC would possess authority to rapidly remove war and death-related contracts from all registered trading venues.
Bitcoin declined 1.8% during overnight trading within this same timeframe, falling to approximately $69,500, as general cryptocurrency market confidence weakened.
Polymarket facilitated over $3.6 billion in wagering activity exclusively during the 2024 U.S. presidential election period. Should the bills move forward, both platforms may encounter intensified regulatory examination from both the CFTC and SEC.
The CFTC has concurrently been developing initiatives to broaden prediction market access through a partial-payout structure created in partnership with Cboe. This developmental work now proceeds parallel to the proposed regulatory limitations.
Both pieces of legislation have been forwarded to committee consideration, with no established schedule announced for subsequent proceedings.
