Democrats To Introduce Legislation Explicitly Banning Prediction Markets Related to War and Death

Two Democrats from California plan to introduce legislation to explicitly ban prediction markets from offering contracts related to war and death. The two most popular prediction market platforms — Kalshi and Polymarket — have both been offering opportunities for users to bet on certain events and outcomes from the war in Iran and other conflicts. Kalshi and Polymarket have found friends in the Trump administration, with the Commodity Futures Trading Commission now saying that it will fight any state-level litigation against prediction markets. Democrats were incensed by that announcement, and are now even more concerned that the commission will not actively enforce regulations to bar individuals from betting on outcomes like when certain events take place, such as the beginning of military hostilities, or when certain leaders are removed from power.President Trump’s son, Donald Trump Jr., holds advisory roles at both Kalshi and Polymarket. He serves as a strategic advisor for Kalshi and is on the advisory board for Polymarket, and his venture capital firm, 1789 Capital, has invested in Polymarket.Senator Adam Schiff says he and a fellow Californian, Congressman Mike Levin, will introduce a bill to officially ban these kinds of prediction markets under federal statute. “I’m introducing a bill to ban bets on war and death in prediction markets. Betting on war and death creates an environment in which insiders can profit off of nonpublic information, our national security is jeopardized, and violence is encouraged,” Mr. Schiff wrote on X. “Congress must act.”The Wall Street Journal first reported that the legislation would soon be introduced.In a statement to the New York Sun, a Kalshi spokeswoman says the company supports efforts to keep prediction markets “safe,” though she noted that insider trading and markets relating to death and war are already banned. “Kalshi already bans insider trading and markets directly tied to death and war,” the spokeswoman says. “As a US-based exchange, we support regulators and policymakers from both sides of the aisle in their efforts to keep these markets safe and responsible in America.”Mr. Levin has been especially outspoken about the risks of these prediction markets offering contracts tied to death and war, not only on moral grounds, but because it could allow government insiders to bet on deadly outcomes before any operations are launched. On the same day that President Trump and the Israelis launched the strikes on Iran, Mr. Levin found a suspicious trade on Polymarket placed just about an hour before the attack was announced. “It appears that a Polymarket account called ‘Magamyman’ made $515,000 in a single day betting on last night’s U.S. strike on Iran, with the first trade placed 71 minutes before the news broke publicly,” Mr. Levin wrote less than 24 hours after the initial strikes took place. “When this person bought in, the market had this at a 17 percent probability. They turned roughly $87,000 into over half a million dollars overnight,” Mr. Levin continued. “Prediction markets cannot be a vehicle for profiting off advance knowledge of military action. We need answers, transparency, and oversight.”That one account known as “Magamyman” was making a few thousand dollars betting on other geopolitical issues related to the Middle East, including whether or not Iran would strike Israel, or whether Israel would invade Syria. Neither Kalshi nor Polymarket are offering prediction market contracts explicitly dealing with death, though they continue to offer contracts which could be directly tied to war. Until the Iran war began, individuals were able to put money on the question of when, exactly, American or Israeli strikes would begin. Other contracts which may be directly impacted directly by military conflicts, including if President Díaz-Canel of Cuba will leave office this year. Mr. Trump on Monday said there may be a “takeover” of Cuba by the United States, even if it has to be an “unfriendly” one. A similar contract was offered on Kalshi related to Supreme Leader Ali Khamenei’s tenure. Gamblers were allowed to place bets on whether or not Khamenei would still be in office by the end of February, and after his death on the final day of that month, many users believed that they would receive their payout. Unfortunately for them, the co-founder of Kalshi, Tarek Mansour, said that those winnings would not be handed out because his firm does not offer contracts related to any individual’s death. Khamenei’s killing essentially voided all markets which questioned the time of his removal from power, because the company would not recognize a person’s death as a legitimate outcome for a payout. The total value of that market questioning Khamenei’s future would have resulted in more than $50 million being paid out to users. Kalshi is now being sued in a class action lawsuit by those users, who accused the firm of “predatory” behavior.

Democrats To Introduce Legislation Explicitly Banning Prediction Markets Related to War and Death

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