In a move that has drawn sharp criticism from regulators and the public, Americans were recently able to place bets on the outcome of a high-profile murder case. The contracts, offered by New York-based exchange Kalshi Inc., allowed traders to wager on various aspects of the legal proceedings against Luigi Mangione, who is accused of killing UnitedHealth Group executive Brian Thompson on December 4, 2024.
Kalshi, known for its broad range of “events contracts” that let individuals speculate on outcomes of real-world events, listed wagers such as whether Mangione would be extradited to New York, whether he acted alone in the murder, and whether he would be convicted or plead guilty. The trading, which began on December 11, 2024, came to an abrupt halt just two days later after Kalshi received a notice from regulators.
Regulatory Pushback and Ethical Concerns
The Commodity Futures Trading Commission (CFTC), which regulates Kalshi, has long prohibited futures trading linked to crimes, including assassination, terrorism, and war, if such contracts are deemed against the public interest. Both the CFTC and Kalshi have declined to comment on the matter, but the exchange’s decision to suspend trading indicates the growing scrutiny of these controversial contracts.
Critics have condemned the move, with some arguing that futures trading on such tragic events goes beyond legitimate economic risk management and into the realm of gambling. “It’s straight gambling,” said Cantrell Dumas, director of derivatives policy at Better Markets, a Washington-based financial policy think tank. “People are betting on whether this person is allegedly responsible for the assassination of another human being, and here we are desensitised to this and betting on whether he’ll enter a guilty plea.”
These concerns highlight the challenges regulators face as they navigate the rapidly expanding and often unregulated world of events contracts. With platforms like Kalshi able to list these contracts without prior approval from the CFTC, and with minimal regulatory oversight, it raises critical questions about the ethical implications of allowing wagers on sensitive issues like criminal trials.
Unregulated Exchanges Continue to Trade
Despite the trading halt on Kalshi, contracts related to Mangione’s case continued to be traded on unregulated platforms, including the crypto-based exchange Polymarket. Polymarket, which has excluded U.S. users since 2022 as part of a settlement with U.S. authorities, allowed trades on the same events related to Mangione.
Legal proceedings surrounding Mangione’s case continued as planned, with the accused pleading not guilty on December 23, 2024. His defense attorney expressed concerns about the fairness of the trial, citing public statements made by state officials.
Growing Precedent for Event-Driven Contracts
This is not the first time an event-driven futures contract has raised ethical concerns. Nearly three decades ago, a UK bookmaker offered betting on the outcome of the O.J. Simpson murder trial, attracting significant public attention and raising alarms about the potential exploitation of legal matters for financial gain. Despite the growing presence of such contracts, many exchanges refuse to offer them, regardless of whether they are legally allowed to do so.
In the U.S., the CFTC’s role in overseeing these contracts has become increasingly complicated. The agency is currently reviewing its stance on such futures contracts, particularly following its attempts earlier this year to block Kalshi from offering bets on elections. After facing legal challenges, the CFTC was forced to allow election-themed trading to continue, raising the prospect that event contracts will continue to proliferate.
Gary Dewaal, a retired senior counsel and derivatives markets specialist, noted that the continued growth of these contracts reflects the challenges regulators face in managing new and evolving financial products. “It’s not surprising that activities that are enumerated and potentially prohibited as the subject of derivative contracts are ones that are going to be on the forefront of issuers’ agenda,” Dewaal said.
With the rapid rise of event contracts, including those based on elections, legal cases, and other controversial topics, the issue is unlikely to fade anytime soon. As regulators grapple with these new financial products, the debate over the limits of what should and should not be allowed in futures trading is set to intensify.
