Democratic regimes have been linked to terrorism for contending reasons, with some scholars claiming democracy increases terrorism and others claiming it decreases terror. Corroborating evidence has been used for both relationships leading to the following puzzle: why do some democratic regimes seem to foster terrorism while others do not? We offer an explanation based on Tsbelis’s veto players theory. Beginning with the assumption that terror groups want to change government policy, we argue that the more veto players present in a political system, the more likely the system is to experience deadlock. Given the inability of societal actors to change policies through nonviolent and institutional participation, these systems will tend to generate more terror events. We also explore different methods for estimating terrorism models. We identify several ways to match the data with the proper statistical estimator and discuss implications for terrorism research. Finally, we use new data from the Global Terrorism Database (GTD) that was previously unavailable. These data allow us to use different operational definitions of terrorism and to identify homegrown terror events.