I wish somebody (one not associated with any DPL, 'AM', 'AP', etc) would file a lawsuit in federal court, challenging the government to prove that a 'death prediction lottery' or 'Assassination Market' is necessarily illegal. That's because currently the Feds may be secretly planning to file charges against 'AM's Sanjuro or others, and it
would be better to pre-challenge them, before they can act like heroes, sweep in, and arrest the 'evil criminals'.
I think such a market would be reasonably safe if the pay-outs were covered by a condition which cancelled the payment if the recipient were determined to be criminally responsible for the death (in which case the money would otherwise be seized as proceeds of crime anyway, so the bookmakers might as well try to claim the money back rather than let the treasury have it).
However, I think the operators would probably run into difficulties with either the bookmaking laws or the life-insurance laws.
It is also very difficult to get a court to rule that something is legal before you get prosecuted or sued for doing it, which, given the complexity of our legal systems, seems like a fairly significant flaw. Test cases provide some protection in civil matters, but there isn’t really a practical analogue in criminal matters.