U.S. Senator Adam Schiff (D-CA) has introduced federal legislation aimed at prohibiting certain high-stakes speculative contracts, citing profound national security risks. The proposed law, titled the DEATH BETS Act, would explicitly ban federally regulated prediction-market platforms from offering contracts tied to war, terrorism, assassination, and individual deaths.
Legislative Action to Curb “Death Bets”
The bill seeks to amend the Commodity Exchange Act to make such contracts illegal for any entity under the oversight of the U.S. Commodity Futures Trading Commission (CFTC). In his statement, Senator Schiff argued that markets allowing traders to profit from violent or tragic events create perverse incentives. He warned they could encourage the misuse of classified information, threaten national security, and even act as a catalyst for violence.
“These prediction markets have become a Wild West,” Schiff said, calling on Congress and the CFTC to establish a clear, unambiguous rule: wagering on death and catastrophe is not permitted in regulated U.S. markets. The legislation specifically targets contracts referencing “terrorism, assassination, war, or any similar activity,” or those directly related to an “individual’s death.” The bill has been referred to the Senate Committee on Agriculture, Nutrition, and Forestry, on which Senator Schiff serves.
Recent Events Spark Regulatory Response
The introduction of the DEATH BETS Act follows heightened scrutiny of event-contract platforms during the recent military confrontation between the U.S., Israel, and Iran. War-related markets on platforms like Polymarket saw significant trading volume and renewed allegations of insider activity.
For instance, blockchain analytics firm Lookonchain identified six wallets, all created in February 2024, that collectively netted approximately $1 million by accurately betting on the timing of a U.S. strike against Iran. Analysis showed several large share purchases occurred just hours before the first reported explosions in Tehran. Separately, on a recent Tuesday, a new wallet spent $32,900 betting on U.S. forces entering Iran by the upcoming Saturday, despite declining odds, according to Lookonchain data.
These incidents echo prior concerns. In February, Israeli authorities arrested and indicted two individuals suspected of using non-public information about Israel’s strike on Iran for insider trading on Polymarket. The pattern of suspicious timing was also noted in January, when a Polymarket account profited around $400,000 after placing a bet on Venezuelan President Nicolás Maduro’s capture just hours before U.S. forces detained him.
These cases underscore the type of activity Senator Schiff’s legislation intends to prevent within CFTC-regulated venues. The bill does not seek to ban all prediction markets but draws a regulatory line at contracts whose very subject matter involves loss of life or acts of war.
Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently.
