Prediction market activity has climbed sharply as traders flock to contracts tied to the escalating US-Iran conflict, while Washington moves toward clearer federal rules for event contracts and a legislative push to explicitly bar markets tied to war, terrorism and death.
Notional trading volume on Polymarket and Kalshi rose to new all-time highs during the week ending Monday, March 9, to $2.49 billion and $2.85 billion, respectively, according to Token Terminal data. The growing activity has pushed the total notional volume across all prediction markets to $145 billion through 2.8 million unique users, data from Dune shows.
While the ongoing conflict drives more activity to these platforms, US regulators are seeking public feedback on new prediction market legislation and weighing a potential ban on war and terrorism-related event contracts.
Polymarket notional trading volume, weekly, all-time chart. Source: Token Terminal
US lawmakers race to regulate prediction markets
The US Commodity Futures Trading Commission (CFTC) issued a staff advisory classifying event contracts on prediction markets as a “financial asset class,” Cointelegraph reported on Thursday.
The regulator also submitted an Advanced Notice of Proposed Rulemaking, asking for public comment on how the Commodity Exchange Act (CEA) would apply to prediction markets. The move came weeks after CFTC chair Michael Selig publicly reiterated claims that the CFTC had “exclusive jurisdiction” over prediction markets.
Last Monday, an Ohio judge pushed back against the claim in a ruling, saying that Kalshi had failed to show the CEA “would necessarily preempt Ohio’s sports gambling laws,” or that these sports betting contracts would fall under the “exclusive jurisdiction” of the CFTC.
Kalshi is headquartered in New York and regulated by the CFTC as a Designated Contract Market (DCM).
Polymarket US is also headquartered in New York City and has been operating under the CFTC since late 2025, after acquiring CFTC-licensed QCX LLC for $112 million and rebranding to Polymarket US. Polymarket’s offshore platform remains separate from Polymarket US, the company’s federally regulated US venue.
In January 2022, the CFTC charged Polymarket’s parent company, Blockratize, with illegally offering unregistered event-based options contracts. Polymarket settled by paying $1.4 million in civil monetary penalties and winding down unlicensed operations before the restructuring.
In November 2025, the CFTC issued an Amended Order of Designation for Polymarket US, vacating prior restrictions and authorizing trading as a DCM.
Related: Kalshi, Polymarket face trading halt in Nevada after court rulings
Senator seeks to ban war-related prediction market contracts
On Tuesday, US Democratic Party Senator Adam Schiff introduced new legislation seeking to ban federally-regulated prediction marks from listing contracts tied to war, terrorism, assassination, and individual deaths.
The so-called DEATH BETS Act seeks to amend the CEA to include a ban on similar contracts for entities overseen by the CFTC.
DEATH BETS Act. Source: Schiff.senate.gov
The proposition followed renewed insider trading allegations, after six Polymarket traders netted $1 million by accurately betting on the US strike against Iran.
In February, Israeli authorities arrested and indicted two people suspected of using secret information about Israel’s strike on Iran for insider trading on Polymarket.
Polymarket, notional volume per category, weekly. Source: Dune
Prediction market activity has been rising since the beginning of the recent US and Israeli military conflict with Iran. Politics-related contracts soared to become the third-largest category on Polymarket at $598 million and the eighth-largest on Kalshi with $16 million, based on last week’s notional trading volume seen on Dune.
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