CFTC Looks to Curb War-Related Prediction Market Bets

Federal regulators have introduced a proposal to crack down on war/terror-related prediction market bets.

The Commodity Futures Trading Commission (CFTC) on Wednesday (June 10) proposed new rules that would permit essentially all sports-related betting on prediction platforms, while arguing against bets on war, terrorism or assassinations.

This follows calls from lawmakers earlier this year to restrict prediction market bets on war-related topics.

“I want to talk about a dystopian world we are entering—where every moment, event and crisis just become commodities,” Sen. Chris Murphy (D-Conn.) wrote in an X post announcing plans to introduce legislation outlawing war-related trades.

The commission argues that event contracts involving war and terror have the potential to lead to violence, harm or other illicit behavior, thus raising public interest concerns.

People with special knowledge of these types of activities or events have a public duty to report this information to the authorities, the commission said, citing the example of a private terrorist expert who uncovered communications about an assassination plot.

That expert, the CFTC added, should alert authorities, rather than trading event contracts dealing with that assassination.

“It is contrary to the public interest to profit from the potential assassination of a human being,” the report said.

Beyond that, the CFTC said it “believes that event contracts involving terrorism, assassination, or war could potentially encourage such activity, because there is a potential for individuals to act in order to receive payout under the event contracts, resulting in significant risk of harm to human life and property.”

The CFTC’s proposal comes amid a debate over whether regulation of prediction markets should be left to states or the federal government.

President Donald Trump said in a social media post last month that the CFTC must retain exclusive authority over prediction markets and that the federal government would protect the industry.

The CFTC in April filed separate lawsuits against Arizona, Connecticut and Illinois after those states took actions that the regulator said intruded on its jurisdiction over prediction markets.

Weeks later, the commission sued New York in response to what it said was the state’s effort to apply its gambling laws to CFTC-regulated contract markets.