TLDR
- California Senator Adam Schiff unveiled the DEATH BETS Act to prohibit prediction market wagers on terrorism, war, assassination, and fatalities
- The proposed legislation would eliminate CFTC’s authority to permit such contracts by encoding permanent restrictions into federal statutes
- California Representative Mike Levin highlighted that more than $500 million in bets were placed on when U.S. military operations against Iran would occur
- Connecticut Senator Richard Blumenthal proposed separate legislation focused on combating fraud and illicit trading in prediction markets
- Blumenthal’s proposed law would restore certain regulatory powers to state governments
Lawmakers from the Democratic Party have unveiled two separate legislative proposals targeting prediction markets, specifically those offering contracts related to warfare, fatalities, and military operations.
On March 11, California Senator Adam Schiff presented the DEATH BETS Act. This legislation would prohibit any exchange registered with the CFTC from offering contracts linked to terrorism, warfare, assassination, or the death of individuals.
The proposal would directly modify the Commodity Exchange Act. This approach ensures the prohibition becomes statutory law instead of remaining subject to regulatory interpretation.
Currently, the Commodity Futures Trading Commission holds authority to determine if particular contracts are “contrary to the public interest.” However, this determination varies based on the agency’s leadership.
Mike Selig, who assumed the role of CFTC Chair in December, has demonstrated favorable views toward prediction markets. Schiff’s legislation would eliminate this discretionary power from both Selig and subsequent chairs.
California Representative Mike Levin presented the House version of this legislation. This dual introduction gives the proposal bicameral support.
In his statement, Levin emphasized the magnitude of the issue. He noted that wagers exceeding half a billion dollars were placed solely on the timing of American military actions against Iran.
“That is unacceptable, and this legislation puts a stop to it,” Levin said.
Schiff Says National Security Is at Risk
Schiff contended that permitting wagers on warfare and death creates opportunities for individuals with classified access to profit from privileged information. He warned this poses national security threats and might incentivize 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 establishes comprehensive enforcement criteria. It would prohibit contracts that directly involve or demonstrate strong correlation with an individual’s death.
This expansive language aims to prevent platforms from exploiting loopholes to offer comparable products with alternative labeling.
Blumenthal Targets Fraud and Insider Trading
Also on March 11, Connecticut Senator Richard Blumenthal unveiled separate legislation. 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 stated his legislation would establish “basic guardrails and safeguards.”
His legislative proposal similarly prohibits contracts associated with war, death, and military operations, mirroring Schiff’s bill.
A significant distinction is that Blumenthal’s proposal would restore certain oversight authority to state governments. This contradicts CFTC Chair Selig’s recent efforts to establish exclusive federal jurisdiction over prediction markets.
These two proposals signal an escalating Democratic effort to regulate an industry experiencing rapid expansion. Prediction markets entered mainstream consciousness during the 2024 electoral cycle and have sustained their growth.
Blumenthal stated his legislation “bans dangerous and unethical bets and protects consumers from fraud and other predatory practices.”
Both legislative proposals were introduced on March 11 and must advance through committee proceedings before any full chamber vote can occur.
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