No prediction market bets on sports, election, war under new bill

A group of Congressional Democrats on Thursday introduced legislation that would ban prediction market betting on elections, government actions, war and sports as scrutiny on the popular platforms intensifies.

Sens. Jeff Merkley, D-Ore. and Elizabeth Warren, D-Mass. and Rep. Jamie Raskin, D-Md., are spearheading the measure, which comes after a series of well-timed bets on world events including the ouster of Venezuelan President Nicolas Maduro and the war in Iran raised questions about prediction markets like Kalshi and Polymarket.

“If anyone can use prediction markets to make a well-timed bet on whether Congress will pass a bill, government action, or a military strike, that is ripe for corruption and erodes public trust,” Merkley said in a statement. he said. “The Stop Corrupt Betting Act restores the original purpose of prediction markets and prevents them from further eroding our democratic institutions and turning them into a casino.”

The bill, which would impose broader restrictions on markets than most other legislative measures, is the latest in a series of proposals to rein in prediction markets, which have become increasingly popular recently and allow users to bet on a variety of events.

Sen. Adam Schiff, D-Calif. and John Curtis, R-Utah, have teamed up on a measure to ban sports betting market contracts, which they argue are tantamount to gambling and are subject to virtually no regulation.

Kalshi criticized Schiff and Curtis’ proposal in a statement to CNBC on Wednesday, saying, “It’s clear that this bill is motivated by casino interests that are threatened by competition. They’re more worried about protecting their monopolies than they are about protecting consumers.”

A. bipartisan House caucus On Wednesday, he introduced legislation that would ban members of Congress, the president and other executive branch officials from trading in certain prediction markets. Earlier this month, Merkley introduced her own proposal with Sen. Amy Klobuchar, D-Minn., that would similarly bar elected officials from getting rich from prediction markets.

As lawmakers turn up the heat, Kalshi And polymarket Both announced new insider trading protections on their platforms this week. Kalshi says markets related to war or death are not allowed.

Spokespeople for both prediction markets did not immediately respond to a request for comment Thursday morning.

Merkley, Warren and Raskin’s latest proposal would include an outright ban on certain prediction market activities, as well as clarifying that these markets are contrary to the intent of federal law governing contract trading and returning the authority to regulate gambling to the states, according to Merkley.

At least 20 lawsuits have been filed by states and gaming regulators arguing that prediction markets represent a loophole in gambling and should be regulated by the state.

The new bill would also require the Government Accountability Office, Congress’ nonpartisan, independent watchdog, to conduct a study on prediction markets and insider trading.

Disclosure: CNBC and Kalshi have a business relationship that includes a minority investment in CNBC.