Senators urge crackdown on harmful prediction market contracts tied to death
A group of Senate Democrats is pressing the nation’s top commodities regulator to take a harder line on prediction market contacts that hinge on violence, war or someone’s death.
In a letter sent Tuesday (February 24) to Commodity Futures Trading Commission (CFTC) Chairman Michael Selig, the lawmakers, led by Sen. Adam Schiff, argued that certain contracts now circulating online cross both legal and ethical lines. “These contracts present dangerous national security risks, including creating incentives to incite violence, foment geopolitical conflicts, and disclose classified information,” they wrote.
The senators pointed to a series of recent offerings on offshore exchanges that sparked backlash. Among them were wagers on whether NASA’s Artemis II mission would explode, whether Venezuelan President Nicolás Maduro would be forcefully removed from power, and whether Russian forces would seize the Ukrainian town of Myrnohad. Critics say those markets expose glaring weaknesses in oversight and create openings for insiders with sensitive information to profit.
The Artemis-related market was withdrawn after public outcry. In another case, Israeli authorities charged a reservist and a civilian in an alleged scheme involving classified information and betting activity on Polymarket.
Growing scrutiny of prediction market wagers that center on violence and death
Federal law already bars certain types of event contracts. Under the Commodity Exchange Act and CFTC rules, regulated exchanges cannot list contracts tied to terrorism, assassination, war or similar events. Still, the senators contend that gray areas and uneven enforcement have allowed troubling products to flourish, particularly on platforms operating outside the United States.
They urged Selig to clarify that any contract resolving on, or closely correlated with, a person’s death should be explicitly prohibited and actively policed. “These recent events … underscore the dangerous incentives directly or indirectly tied to offering contracts related to prohibited categories,” the letter states, “and risk incentivizing real-world harm by creating financial rewards linked to destabilizing events or physical injury.”
The letter also bears the signatures of Sens. Catherine Cortez Masto, Richard Blumenthal, Cory Booker, Tim Kaine and Jacky Rosen. Earlier this month, Schiff and more than 20 other Democrats asked the CFTC not to intervene in litigation involving state efforts to restrict certain prediction markets, signaling a broader campaign to tighten the regulatory perimeter.
Lawmakers have simultaneously introduced legislation aimed at blocking insider trading in prediction markets, reflecting mounting concern that fast-growing platforms could be misused as vehicles for speculation on human tragedy.
Industry voices say there is room for common ground. In a statement posted to social media, the Coalition for Prediction Markets wrote: “We agree contracts involving death have no place on American exchanges. That’s why regulated platforms don’t allow these markets in the first place. It’s time to crack down on unregulated exchanges that promote this harmful activity.”The debate now centers on how aggressively federal regulators will move as companies such as Polymarket explore re-entering the U.S. market through acquisitions of licensed exchanges.
Featured image: Mike Selig via X
The post Senators urge crackdown on harmful prediction market contracts tied to death appeared first on ReadWrite.
