US lawmakers introduce bill to ban prediction market contracts tied to war and death

US lawmakers have introduced legislation that would prohibit prediction market contracts tied to war, terrorism and individual deaths, escalating scrutiny of event-based trading platforms such as Polymarket.

Senator Adam Schiff and Representative Mike Levin, both Democrats from California, introduced the Discouraging Exploitation of Tragedy and Harm in Event Systems Act, known as the Death Bets Act.

The bill would impose a statutory ban on event contracts linked to armed conflict, assassinations, terrorism or individual deaths on exchanges registered with the Commodity Futures Trading Commission (CFTC).

Under current law, the Commodity Exchange Act already allows the CFTC to block certain event contracts if they are deemed contrary to the public interest. However, the decision ultimately depends on regulatory discretion, which can shift depending on the agency’s leadership.

The proposed legislation would remove that discretion by creating an explicit prohibition.

Levin said: “Betting on war and death should be illegal,” arguing that gaps in existing regulations allow traders to profit from violent events.

Schiff argued: “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.”

The proposal follows controversy surrounding prediction markets linked to geopolitical events. After US-Israeli airstrikes on Iran on February 28, trading activity in Iran-related contracts on Polymarket surged past $529m.

According to reports, one trader earned more than $550,000 after placing bets shortly before the strikes took place.

The CFTC is currently reviewing its regulatory approach to event-based contracts and has signaled plans to seek public input through a rulemaking process.

Whether the Death Bets Act advances will depend on support from Republican lawmakers in a divided US Congress.