Key Points
- California Senator Adam Schiff unveiled the DEATH BETS Act aimed at prohibiting prediction market contracts related to assassination, terrorism, war, and death
- The proposed legislation would establish permanent federal prohibitions, eliminating CFTC regulatory discretion
- More than $500 million in wagers on U.S. military strike timing against Iran were reported by Representative Mike Levin
- Connecticut Senator Richard Blumenthal put forward separate legislation focused on combating insider trading and fraud within prediction markets
- Blumenthal’s proposal would restore certain regulatory authority to state governments
A pair of legislative proposals from congressional Democrats seeks to impose sweeping restrictions on prediction markets, specifically targeting contracts linked to military operations, deaths, and violent events.
On March 11, California’s Senator Adam Schiff brought forward the DEATH BETS Act. The measure would prohibit CFTC-registered platforms from offering contracts connected to war, terrorism, assassination, or the death of individuals.
The proposal works by directly modifying the Commodity Exchange Act. This approach embeds the prohibition within federal statute instead of relying on regulatory interpretation.
Currently, the Commodity Futures Trading Commission holds authority to determine if particular contracts violate “public interest” standards. However, this determination varies based on leadership priorities.
Mike Selig, who assumed the CFTC Chair position in December, has demonstrated openness toward prediction markets. Schiff’s legislation would eliminate this discretionary power from Selig and subsequent agency leaders.
California Representative Mike Levin brought the House version of the legislation, making it a bicameral initiative.
In his public remarks, Levin highlighted the magnitude of betting activity. He revealed that wagering on the precise timing of U.S. military operations against Iran exceeded half a billion dollars.
“That is unacceptable, and this legislation puts a stop to it,” Levin said.
National Security Concerns Drive Schiff’s Proposal
Schiff contended that permitting speculation on warfare and mortality creates opportunities for those with access to sensitive information to profit illegally. He warned of national security implications and potential incentives for 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 legislation employs expansive enforcement language. It would prohibit contracts directly involving or substantially correlated with someone’s death.
This comprehensive approach aims to close loopholes that might allow platforms to circumvent restrictions by rebranding similar financial products.
Blumenthal’s Bill Addresses Market Manipulation
That same day, Connecticut Senator Richard Blumenthal released his own legislative proposal. The Prediction Markets Security and Integrity Act concentrates on preventing fraud, insider trading, and market manipulation.
Blumenthal characterized the prediction market sector as “out of control.” He emphasized that his legislation would establish “basic guardrails and safeguards.”
His bill similarly prohibits contracts connected to military action, death, and warfare.
A notable distinction is Blumenthal’s inclusion of provisions restoring certain regulatory powers to state authorities. This provision contradicts CFTC Chair Selig’s recent attempts to establish exclusive federal jurisdiction over prediction markets.
These parallel legislative efforts reflect mounting Democratic concern about an industry experiencing rapid expansion. Prediction markets entered mainstream consciousness throughout the 2024 election and have maintained growth momentum.
Blumenthal stated his legislation “bans dangerous and unethical bets and protects consumers from fraud and other predatory practices.”
Both measures were filed on March 11 and must navigate the committee process before advancing to floor votes in their respective chambers.
