Senate Democrats advocate for prohibition on wagering in prediction markets linked to conflict and fatalities.

Senate Democrats’ legislation aims to enshrine the ban in federal law even as the CFTC moves towards a more lenient approach regarding event contracts.

Key points:

• Senator Adam Schiff has proposed the DEATH BETS Act, which would formally prohibit prediction market contracts associated with terrorism, war, assassination, and individual fatalities.
• This legislation would eliminate the Commodity Futures Trading Commission’s authority over such contracts by forbidding any CFTC-registered exchange from offering them, including those closely linked to a person’s demise.
• Schiff’s initiative, supported by upcoming complementary legislation in the House, directly opposes CFTC Chair Mike Selig’s efforts towards more relaxed regulation of prediction markets following the agency’s abandonment of a sweeping ban on political betting.

Sen. Adam Schiff (D-CA) has put forward a legislative proposal that seeks to prohibit prediction market contracts associated with terrorism, war, assassination, and death, directly contesting the CFTC’s transition toward less stringent regulation of event trading.

The bill, known as the DEATH BETS Act, would remove the agency’s discretion regarding the approval of such contracts and explicitly establish prohibitions in law, placing Schiff in direct conflict with CFTC Chair Mike Selig’s deregulatory strategy.

Schiff, who serves on the Senate Agriculture Committee overseeing the CFTC, is positioned to advocate for the matter legislatively as the agency’s new rule-making process develops.

According to the Commodity Exchange Act, the CFTC already possesses the power to prohibit contracts related to war, terrorism, or assassination if it determines that they are against the public interest. However, enforcement is contingent on the regulator’s judgment, which means the extent of protection can vary with agency leadership.

Schiff’s bill would remove that variability. It would prevent any CFTC-registered exchange from listing contracts that involve, relate to, or reference terrorism, assassination, war, or an individual’s death. The ban also covers contracts that could be “interpreted as closely correlating” to a person’s death, a notably broad criterion.

“Betting on war and death creates a setting where insiders can benefit from classified information, our national security is at risk, and violence is promoted,” Schiff stated in a release. “There is no justification for wagering on lives, nor any public advantage to be gained from such a market.”

Rep. Mike Levin (D-CA) is set to introduce companion legislation in the U.S. House, as indicated by a communication from Schiff’s office.

This proposal emerges as the CFTC, under Selig, revises its regulatory framework for prediction markets.

In February, the agency retracted a 2024 proposition that would have broadly prohibited political prediction markets, with Selig denouncing the earlier initiative as regulatory excess.