Democratic Senator Adam Schiff submitted a bill to stop prediction markets that have to do with war, death, and terrorism. This comes as worries about insider trading in military operations grow.
On Tuesday, US Democratic Senator Adam Schiff filed a bill that would make it illegal for federally authorised prediction-market platforms to publish contracts related to war, terrorism, assassination, and individual deaths.
The DEATH BETS Act would reform the Commodity Exchange Act so that the US Commodity Futures Trading Commission (CFTC) can’t allow the contracts to be traded.
Lawmakers warn of national security risks
In a statement about the bill, Schiff argued that markets that enable speculators to make money off of violent events make it more likely that classified material would be misused, put national security at risk, and promote violence. He added that prediction markets had turned into a “Wild West” and asked Congress and the CFTC to make it clear that “death bets” are not permissible.
The measure wants to make it illegal to have prediction market contracts that mention “terrorism, assassination, war, or any similar activity” or are connected to “an individual’s death.” The Senate Committee on Agriculture, Nutrition, and Forestry, where Schiff is a member, was asked to look at the bill.
Source: Schiff.senate.gov
Military conflict bets raise insider trading concerns
The law comes following intensified scrutiny of event-contract platforms during the recent US and Israeli military confrontation with Iran, when war-related markets saw a lot of trading and new claims of insider conduct.
Six Polymarket traders made $1 million by correctly betting on the US attack on Iran.
All six wallets were created in February, and they all placed bets on contracts predicting when the US might attack. A few of them purchased shares mere hours prior to the initial explosions in Tehran, the capital of Iran.
According to the blockchain data platform Lookonchain, a new wallet invested $32,900 on Tuesday to wager that US troops would be in Iran by Saturday, even though the odds kept getting worse.
In February, the Israeli government detained and charged two people with insider trading on Polymarket. They were thought to have used classified information regarding Israel attacking Iran to make money.
In January, insider worries escalated when a Polymarket account made $400,000 after betting that Venezuelan President Nicholas Maduro would be detained. The account placed the bet just hours before US soldiers caught him.