Senators tell CFTC prediction market contracts need clear guidance

Six Democratic senators told the Commodity Futures Trading Commission in a previously unreported letter that they have strong concerns about prediction market contracts “that incentivize physical injury or death,” saying the contracts “present dangerous national security risks.”

The senators urged CFTC Chairman Michael Selig in the letter sent Monday to “clearly reiterate that the CFTC will categorically prohibit any contract that resolves upon or closely correlates to an individual’s death.”

The letter notes that under federal commodity regulations, the CFTC already “categorically prohibits” contracts that involve or reference terrorism, assassination, war or similar actions.

The letter was sent as prediction markets such as Polymarket and Kalshi have become increasingly popular and as questions have been raised about how those markets should be regulated, whether they are contributing to a rise in gambling addiction, and about the risk of people with inside information taking positions on contracts.

The letter notes that the CFTC “has cleared the way” for Polymarket to reenter the U.S. market after U.S. users being ostensibly blocked from accessing contracts on the company’s offshore exchange.

The Democrats who signed the letter are Sens. Adam Schiff of California, Richard Blumenthal of Connecticut, New Jersey’s Cory Booker, Tim Kaine of Virginia, and Nevada’s Catherine Cortez Masto and Jacky Rosen.

The CFTC didn’t immediately respond to a request for comment about the letter, which cites three contracts offered by Polymarket in recent months relating to a NASA spaceship launch, the fate of Venezuela’s authoritarian leader, and Russia’s invasion of Ukraine.

“These recent events highlight the lack of internal controls and safeguards to prevent insiders from profiting off of non-public information, and direct profiteering off of human suffering,” the letter said.

The CFTC last week filed a legal brief in a federal appeals court asserting that the commission has exclusive jurisdiction over the U.S. commodity derivatives markets and that individual states had no role in exercising such oversight.

“The CFTC will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products,” Selig wrote in a Wall Street Journal op-ed about the filing.

The senators’ letter noted that one of Polymarket’s contracts asked if Artemis II, the upcoming NASA crewed spaceflight mission, would explode.

That contract, which Polymarket listed on Jan. 20, saw the bet “Yes” trading as high as 8% before it “was subsequently renamed and ultimately withdrawn due to public backlash,” the letter said.

“Not only did this contract directly correlate with crewmember death, it incentivized the failure of the mission and potential insider sabotage,” the letter said.

Polymarket in a Feb. 15 post on X about the controversy said, “To clarify: this was a market about a potential booster-stage rupture — a defined hardware failure scenario — not about the Orion crew capsule or astronaut safety. This was not a market on crew injury or loss of life.”

Another contract on Polymarket was on the question of whether Venezuelan leader Nicolas Maduro would be removed from power.

On Jan. 5, an unknown trader made $20,000 in bets that Maduro would be out by Jan. 31, and about two hours after those bets were placed, President Donald Trump ordered a military strike on Venezuela that led to Maduro’s capture and removal to the United States for criminal prosecution.

“When Polymarket resolved the contract around twelve hours later, this trader had netted more than $400,000 in profits,” the letter noted, citing reporting by The Wall Street Journal.

In the third example cited by the senators,  “In November 2025, Polymarket resolved a contract that the Ukrainian town of Myrnohad would be captured by Russian forces by November 15, and individuals who bet YES profited by as much as 33,000 percent.”

“Public reporting later found that a staffer at the Institute for the Study of War, a D.C. based think tank, had edited its map to show that Russia had taken control of a key intersection in the town, ‘despite the lack of indications’ that Russia had made any such advance,” the senators wrote.

“This is a contract that unambiguously ‘involves, relates to, or references’ war and clearly displays the dangers of listing such contracts.”

The letter said the three contracts “underscore the dangerous incentives directly or indirectly tied to offering contracts related to prohibited categories under the” Commodity Exchange Act.

The senators warned that government officials, regulated entities and consultants who may have knowledge about possible policy changes “can easily act on confidential or operationally sensitive information to personally profit in markets that operate with minimal oversight or transparency, or share this information with contacts who can similarly profit.”

“These contracts further risk incentivizing real-world harm by creating financial rewards linked to destabilizing events or physical injury, and by encouraging actors to influence or precipitate those outcomes for personal profit,” the letter said.