Key Takeaways
Contents
- Democratic House members unveiled the Banning Games on Deaths and Elections Act, aiming to prohibit election, war, and death-related contracts on prediction platforms such as Polymarket and Kalshi.
- Senator Adam Schiff and Representative Mike Levin proposed the DEATH BETS Act as a parallel measure, focusing on similar contract restrictions through Commodity Exchange Act amendments.
- Investigations revealed insider profiteering from these markets — including one participant who netted $553,000 from a contract concerning an Iranian leader’s potential assassination.
- Approximately $500 million in wagers on U.S. military action timing against Iran triggered significant regulatory attention and scrutiny.
- Polymarket processed more than $3.6 billion in wagers throughout the 2024 presidential election period and could encounter heightened oversight from both CFTC and SEC should legislation advance.
Two separate legislative initiatives introduced this week by U.S. Congress members could fundamentally alter the operational landscape for prediction market platforms operating domestically, including Polymarket and Kalshi. The proposed bills specifically target contracts involving death, warfare, and political assassinations.
The Banning Games on Deaths and Elections Act, brought forward by Democratic House representatives, would effectively outlaw event-based contracts connected to electoral outcomes, military conflicts, and mortality on platforms subject to federal oversight. The legislation seeks to modify the Commodity Exchange Act by formally designating such contracts as “contrary to the public interest.”
This “public interest” standard represents existing criteria the Commodity Futures Trading Commission employs when rejecting contract applications. However, the absence of explicit statutory language has previously created enforcement challenges.
This regulatory ambiguity enabled Kalshi to mount a successful legal challenge against the CFTC last year, ultimately securing permission to offer U.S. election-related betting products. The proposed legislation seeks to eliminate this regulatory gap.
In a parallel effort, Senator Adam Schiff alongside Representative Mike Levin unveiled the DEATH BETS Act — formally titled the Discouraging Exploitative Assassination, Tragedy, and Harm Betting in Event Trading Systems Act. This measure would apply to any CFTC-registered platform facilitating contracts involving terrorism events, political assassinations, armed conflicts, or individual mortality.
Congressional Motivation Behind the Proposals
The legislative push follows growing concerns regarding insider trading activities on these prediction platforms. Reports indicate roughly $500 million in total wagers placed on the precise timing of potential U.S. military operations against Iranian targets.
Investigative analysis demonstrated that individuals with advance information profited substantially from these prediction markets. Documentation shows one participant generated $553,000 in profits from a contract speculating on the potential assassination of Iran’s Supreme Leader Khamenei.
The two major platforms handled Iran-related contracts through different approaches. Kalshi nullified its Supreme Leader contract citing technical language issues in the contract terms. Polymarket allowed the contract to settle normally, which produced $679 million in contradictory market results and attracted regulatory scrutiny.
Polymarket additionally received criticism for hosting a prediction market evaluating nuclear strike probability. Following public outcry, the platform removed the controversial market from active trading.
Potential Legislative Outcomes
The DEATH BETS Act currently awaits review in a Senate committee. No voting schedule has been established, and the bill’s progression through committee remains uncertain.
The Banning Games on Deaths and Elections Act confronts opposition from congressional members supportive of cryptocurrency and blockchain innovation. Bipartisan backing has not materialized at this juncture.
Should either proposal successfully navigate committee review, the CFTC would likely possess authority to mandate immediate removal of war and death-related contracts across all federally registered exchanges.
Bitcoin experienced a 1.8% decline overnight during this period, sliding to approximately $69,500, reflecting broader cryptocurrency market hesitation.
Polymarket facilitated over $3.6 billion in total wagers exclusively during the 2024 U.S. presidential election cycle. Should either legislative measure advance, both major platforms would likely encounter intensified regulatory examination from the CFTC and Securities and Exchange Commission.
The CFTC has simultaneously pursued expansion of prediction market functionality through a partial-payout mechanism developed in collaboration with Cboe. This developmental initiative now coexists with the restrictive legislative proposals.
Both bills have been forwarded to their respective committees, with no confirmed schedule for subsequent legislative consideration.
