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Read Full BioU.S. Senator Adam Schiff has introduced the DEATH BETS Act, legislation that proposes clarifying a prohibition on prediction markets offering contracts related to war and death.
The bill comes at a time when prediction markets are facing increased heat for accepting wagers on markets related to conflicts in Iran.
The Discouraging Exploitative Assassination, Tragedy, and Harm Betting in Event Trading Systems Act (DEATH BETS Act) seeks to further clarify that any markets related to death are not allowed.
In a press release, Senator Schiff stated, “Betting on war and death creates an environment in which insiders can profit off of classified information, our national security is jeopardized, and violence is encouraged. There is no justification for gambling on lives, or public benefit to be derived by such a market.”
The bill adds additional text to the Commodity Exchange Act (CEA), which already prohibits markets on terrorism, assassination, war, or any similar activity.
The amendment states that it is prohibited to offer a contract “that involves, relates to, or references an individual’s death or could otherwise be construed as correlating closely to an individual’s death.’’
Iran Market Causes Controversy at Kalshi
As war and death markets are already prohibited, Kalshi made the decision not to reward users who had backed Ali Khamenei to be out as Supreme Leader in Iran. Some users have taken exception to that and sued the company.
CEO Tarek Mansour has insisted that the company already follows the CEA’s rules. He stated, “We don’t list markets directly tied to death. When there are markets where potential outcomes involve death, we design the rules to prevent people from profiting from death.”
However, amid the fallout, the company has updated its rules, adding further clarification with a “Death Rule.” It has also launched an ad campaign that states it does not offer death markets.
Its other rules include banning insider trading, not acting as the house in wagers, operating under US law, and not profiting when users lose.
Sen. Schiff, however, says prediction markets cannot be trusted to self-regulate and believes his bill is necessary. He added, “With regulators turning a blind eye, prediction markets have rapidly become the Wild West. As the CFTC seeks to rewrite the rules of the road, Congress must make clear that these death bets are unequivocally prohibited, and this bill would do just that.”
Polymarket Continues to Offer War Markets
Polymarket, unlike Kalshi, settled its market on Khamenei upon his death. The platform also features regular markets on war. It had markets on the timing of US strikes on Iran, raising suspicions that insiders profited from the markets.
One account, Magamyman, is now under investigation by Israeli authorities. The user has gained over $650,000 from wagers on the conflict in the Middle East.
Israel has already indicted two individuals for allegedly using classified information to place wagers about the timing of the country’s military operations.
The site shows no signs of taking down its markets related to war and conflict, however. In an email to users on Tuesday, the site highlighted the biggest movers across markets, three of which were related to war. Two were on Russian military actions in Ukraine, and one on whether Israel will strike Yemen by June.
These markets, however, are on Polymarket’s international platform rather than its recently launched US site. They are therefore not subject to the CEA rules and do not appear to be bound by any country’s regulations.
Several countries have objected to Polymarket offering users the chance to wager on markets that are prohibited, particularly political elections.
The Netherlands threatened to issue weekly fines of $500,000 if it continues accepting Dutch users. The country’s gambling regulator objected to its markets on the country’s elections, which had over $100 million in trading volume.
No More Profiting From Death
With Kalshi already refraining from offering markets on war or death, and Polymarket playing by its own rules on its international platform, it is questionable whether the DEATH BETS Act is necessary.
Representative Mike Levin, who is introducing a companion bill in the House, argues it is essential, warning that markets could lead to the deaths of American soldiers.
Levin stated, “Betting on war and death should be illegal. While federal law prohibits prediction market contracts on terrorism, war, and assassination, there are still gaping holes that allow traders to profit off death.
“The result is a system with nothing standing between a prediction market and a contract that lets someone make money off the outbreak of war or the deaths of American service members.
“We already saw what that looks like: over half a billion dollars was wagered on the timing of U.S. military strikes on Iran alone. That is unacceptable, and this legislation puts a stop to it.”
Whether Polymarket will stop its international platform from offering markets on global conflicts remains to be seen.
