BREAKING: Democrats Target Polymarket US & Kalshi with Bill to Ban Election and Death Prediction Contracts

A sudden 10% market correction hit prediction markets as House Democrats introduced the 'Banning Games on Deaths and Elections Act,' directly targeting platforms like Polymarket US and Kalshi. The legislation explicitly seeks to prohibit event contracts tied to elections, war, and death, arriving amid heightened scrutiny over insider trading that has reached a breaking point in Congress.

Separately, Sen. Adam Schiff and Rep. Mike Levin unveiled the DEATH BETS Act, a companion push targeting the same contract categories under the Commodity Exchange Act.

Rep. Jamie Raskin, leading the House effort, called election gambling contracts a direct threat to democratic integrity. This news comes as Bitcoin USD fell -1.8% overnight, losing $70,000 in the process, and is currently trading at $69,500.

What is the DEATH BETS Act, and What Does it mean for the Likes of Polymarket and Kalshi?

Both bills address the ambiguity in the Commodity Exchange Act regarding event contracts, particularly those related to assassinations, military strikes, or election outcomes. They aim to explicitly prohibit such contracts.

The Banning Games on Deaths and Elections Act would amend the Act to categorize contracts involving these events as “contrary to the public interest,” a standard the CFTC uses to block listings.

Currently, there is no solid legislative foundation for this definition, which allowed Kalshi to successfully challenge the CFTC in court last year.

The DEATH BETS Act goes further, targeting any CFTC-registered exchange that handles contracts related to terrorism, assassination, war, or individual deaths. A reported half-billion dollars was bet on the timing of US military strikes on Iran.

Research indicates insiders profited significantly from these bets, including one trader who earned $553,000 from a contract tied to the assassination of Iranian Supreme Leader Khamenei.

What This Means for Polymarket US and Kalshi

On Khamenei:

We don’t list markets directly tied to death. When there are markets where potential outcomes involve death, we design the rules to prevent people from profiting from death. That is what we did here.

I know some of you disagree and prefer that we list these…

Kalshi and Polymarket approached the Iran contracts differently: Kalshi voided its Supreme Leader contract due to a technicality in the language, while Polymarket settled the bet, leading to $679M in conflicting market results and regulatory scrutiny.

Kalshi won a legal battle allowing it to resume US election betting, but the proposed Banning Games on Deaths and Elections Act could quickly reverse that decision.

Meanwhile, Polymarket continues to dominate global prediction market volume, with over $3.6Bn in bets during the 2024 presidential cycle alone, but may now face increased pressure from the CFTC and SEC if the bill progresses.

What Traders Are Watching Next in the Prediction Markets Space

BREAKING: A suspected military insider won $90K correctly predicting 9 separate military events!

This guy is now betting big on US forces entering Iran!

He will win nearly $100K if he is correct. pic.twitter.com/L4rh2HI3r6

The political landscape for the DEATH BETS Act is complicated. Representative Raskin and the sponsors face resistance from a crypto-friendly faction in a divided Congress, with no cross-party support and no scheduled committee votes.

Meanwhile, the CFTC aims to expand the use of prediction markets through Cboe’s partial-payout framework. Economist Alex Tabarrok argues that limiting these markets hinders information aggregation, likening event contracts to insurance products.

If either bill passes the committee, the CFTC could immediately delist war and death contracts. If both bills stall, the agency will continue under its ambiguous mandate, allowing platforms like Kalshi and Polymarket US to operate. The focus now remains on the DEATH BETS Act text and committee timeline.