It's also illegal to pay someone to do murder or arson, which is easy to obfuscate as an "event contract".

Very true. Someone could place a huge bet for "person X will NOT be assassinated in the next 24 hours" and some lowlife could see the opportunity.

There's many true crime cases where the spouse took out multiple life insurance policies then did the killing to earn money. It's a bounty. We should care about the effect in practice.