A Democratic U.S. Senator from California is spearheading a legislative initiative that could reshape the landscape of crypto-driven prediction markets. Senator Adam Schiff, alongside Representative Mike Levin, has introduced the DEATH BETS Act on March 10, which aims to explicitly prohibit prediction market contracts related to terrorism, war, assassination, or an individual’s death on any platform registered with the Commodity Futures Trading Commission (CFTC).
The proposed bill follows a period of heightened scrutiny surrounding prediction markets, particularly platforms like Kalshi and Polymarket, which are currently regulated. The legislation will strip the CFTC of its broad discretion to determine whether such markets are in the public interest—a power it currently holds under the Commodity Exchange Act. Schiff argues for a clear and unequivocal ban to protect public sentiment:
At a time when CFTC Chair Selig has indicated that he will rewrite the rules on prediction markets, the CFTC can no longer be granted this discretion. The DEATH BETS Act will unequivocally ban these contracts.
The push for the DEATH BETS Act comes after a February 23 letter from Senate Democrats urging the CFTC to intervene against prediction contracts that fundamentally involve betting on physical harm, death, or war. Specific examples cited were contracts surrounding potential catastrophes, such as whether spaceships would explode or political figures would be ousted.
Schiff has vocally criticized the evolution of these markets, labeling them a “Wild West” where the morality of profits generated from human suffering comes into question:
There is no justification for gambling on lives, or public benefit to be derived by such a market. With regulators turning a blind eye, prediction markets have rapidly become the Wild West.
The recent speculation surrounding the Iran conflict has intensified the scrutiny. Notably, a bet on whether Iran’s Supreme Leader Ali Khamenei would be removed had a staggering $54 million in trading volume on Kalshi before being paused.
In the wake of these developments, Rep. Levin stressed the imperative to curb profiting from war and death: over half a billion dollars were wagered related to the timing of U.S. military actions against Iran, which he deems unacceptable:
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.
The implications of the DEATH BETS Act for traders and the crypto industry are significant. While CFTC-supervised platforms may see added safety from regulators, they could also face increased restrictions. Consequently, riskier bets involving death or warfare may migrate to offshore or permissionless venues, which carry heightened legal and reputational risks.
Importantly, this legislation isn’t a blanket prohibition on crypto prediction markets. Rather, it serves as a signal that regulatory battles will extend beyond Bitcoin or ETF discussions, delving deeper into what types of predictions are acceptable in the crypto space.
As the future unfolds, industry participants will watch closely how these legislative efforts influence both the integrity and profitability of prediction markets.
