US lawmakers are moving to stop controversial betting markets that allow traders to profit from violent global events. Democratic Senator Adam Schiff has introduced new legislation aimed at banning prediction market contracts tied to war, terrorism, assassination and individual deaths.
The proposal, known as the DEATH BETS Act, seeks to close regulatory loopholes that currently allow some platforms to offer speculative contracts on violent geopolitical events. Supporters say the bill is necessary to protect national security and prevent the misuse of insider information.
Prediction markets—platforms where users trade contracts based on the outcome of real-world events—have gained popularity in recent years. However, contracts tied to conflicts, political violence and deaths have triggered strong criticism from regulators and lawmakers.
What the DEATH BETS Act Proposes
The DEATH BETS Act (Discouraging Exploitative Assassination, Tragedy and Harm Betting in Event Trading Systems Act) would amend the Commodity Exchange Act to explicitly ban certain types of prediction market contracts.
If passed, the legislation would prohibit any platform regulated by the Commodity Futures Trading Commission (CFTC) from listing contracts that reference:
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War or military conflicts
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Terrorist attacks
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Assassinations
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The death of any individual
Currently, the CFTC already has authority to block contracts linked to war, terrorism or assassination if they are considered against the public interest. The new bill would remove that discretion and enforce a clear legal ban.
Schiff argues that markets allowing people to profit from violence could create dangerous incentives. According to him, traders might exploit classified information or sensitive military intelligence to gain financial advantage. He described the sector as a “Wild West” that requires stronger rules from Congress and regulators.
Insider Trading Concerns After Iran Conflict Bets
The proposed legislation follows renewed scrutiny of prediction markets during recent tensions involving the United States, Israel and Iran.
Trading activity surged on platforms that allowed bets related to potential military strikes and geopolitical developments. Investigators noted several suspicious cases where traders appeared to profit from extremely accurate predictions.
One example involved six wallets that reportedly earned around $1 million by betting on the timing of a US strike against Iran. The accounts were created just weeks earlier and placed large wagers shortly before explosions were first reported in Tehran.
In another case, a newly created wallet reportedly spent $32,900 on a prediction that US forces would enter Iran by a specific deadline, despite declining market odds.
Authorities have also examined potential insider trading incidents linked to geopolitical prediction markets. In February, Israeli officials arrested two individuals suspected of using confidential information about a planned strike on Iran to place profitable bets.
Another controversial trade involved a user who made roughly $400,000 after wagering that Venezuelan President Nicolás Maduro would be captured—just hours before US forces reportedly detained him.
These incidents intensified concerns among policymakers that prediction markets could be exploited by individuals with access to non-public government or military information.
