After billions of bets on the US-Iran strike and internal scandal on platforms like Polymarket, Democrats pushed the DEATH BETS Act, targeting prediction markets that trade in war, fear and death.
Summary
- Polymarket and Kalshi volumes broke records as traders priced in the US strike on Iran and the leadership change in Tehran.
- Six Polymarket accounts are suspected of using insider information to profit during the Iran strike, fueling fears of geopolitical front-running.
- Senator Adam Schiff’s DEATH BETS Act would prohibit CFTC-regulated securities from listing deals related to war, terrorism, genocide or the death of an individual.
The prediction markets have recently entered the moral panic of Washington. After a record increase in trade linked to the US-Iran conflict, the top Democratic official will now cover the most controversial edge in the sector: markets that call for war, terrorism and death.
In the week ending March 9, active and controlled speculative positions reached previous activity highs. Data compiled by Cointelegraph shows Polymarket’s volume reached 2.49 billion dollars during this period, while CFTC-regulated Kalshi posted 2.85 billion dollars, pushing the total volume of all prediction platforms to 14.5 billion dollars and raising unique users to 2.8 million. The trigger was obvious: growing US-Iran tensions, traders are putting heavy prices on the chances of an American strike.
Polymarket’s death markets are getting scrutiny from lawmakers
That caused a political backlash. US Democratic Senator Adam Schiff has introduced the so-called “DEATH BET Act,” a bill that would amend the Commodity Exchange Act to prevent federally regulated futures markets from listing contracts related to war, terrorism, assassinations, or individual deaths. Regulators have long had discretion over “event contracts,” but this proposal would add a hard code and a bright red line around anything that looks like a human catastrophe trade.
Schiff’s move also follows some scandal. Six Polymarket users are accused of using insider information to place a winning bet worth 1 million dollars during the US strike on Iran, highlighting the worst aspect of the industry: special actors making money from sensitive, potentially classified information while the rest of the market thinks they are trading “pure information.” For critics, that episode proves that prediction markets are not just forecasting tools, but a new frontier of geopolitics.
For crypto-native speculation platforms, the message is brutal. Volumes are ultimately at the institutional level, but the flow of order that promotes growth flows directly into sectors that are scheduled to be restricted. If the DEATH BETS framework becomes a template for other regulators, the sector will be pushed into more anodyne contracts—big data, elections, sports—while the wealthiest, most financially dense markets migrate offshore or into gray-zone DeFi. In terms of the market, Washington is saying the silent part out loud: some types of “true markets” will not be allowed to be transparent.
