U.S. Reps Introduce Bipartisan Bill to Prohibit Sports Event Contracts, Other Markets

• Reps. Blake Moore (R-UT) and Salud Carbajal (D-CA) introduced a bill to prohibit certain event contracts
• The bill will prohibit all event contracts related to sports, terrorism, assassination, war, or illegal activity
• Second bill introduced in the last several months to prohibit certain event contracts

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Members of U.S. Congress are beginning to turn their attention to prediction markets, as the second bill to prohibit certain event contracts, including those related to sports, has been introduced since February.

Reps. Blake Moore (R-UT) and Salud Carbajal (D-CA) yesterday introduced a bill to prohibit the trading of all event contracts related to sports, terrorism, assassination, war, or illegal activity.

The Event Contract Enforcement Act seeks to “amend the Commodity Exchange Act to prohibit event contracts based on terrorism, assassination, war, gaming, illegal activity, election outcomes, government activities, or other activities determined by the Commodity Futures Trading Commission to be contrary to the public interest.”

States Will Have Final Say

However, the bill includes a clause which allows a state to exempt itself from the prohibition on gaming contracts, giving them the final say on the controversial prediction market contracts.

“Under-regulated prediction markets have exposed America to needless public safety and national security risks by allowing traders to invest in outcomes related to sensitive matters like terrorism, assassination, war, or elections,” Rep. Moore said in a release. “Prediction markets also sponsor sports-related contracts against the wishes of many states, including Utah, that would otherwise prohibit these contracts if offered as traditional sports betting. I am excited to partner with my friend, Rep. Carbajal, on this nonpartisan issue to ensure event contracts can continue to serve legitimate business interests while protecting Americans from risk.”

Carbajal noted that the act is a “strong step toward protecting consumers and upholding ethical standards across all levels of government.”

“Under-regulated prediction markets are creating an environment ripe for insider trading. The monetization of military activities or election processes threatens our national security and further erodes public trust in government,” he said.

Former Congressman Mick Mulvaney, now the Executive Director of Gambling is Not Investing, applauded the efforts of Reps. Moore and Carbajal to prohibit certain event contracts from the market.

“Today’s introduction of the Event Contract Enforcement Act is an important step toward reining in these pernicious prediction market operators that flout seriously debated and well-crafted state laws governing sports gambling. These so-called prediction markets are nothing more than a backdoor for unregulated gambling. They are unilaterally making online sports gambling widely available to anyone in the country without the consumer protections, age restrictions, and state and local tax benefits that govern legalized sports betting,” he said.

Prediction Markets Under the Microscope

Prediction markets, especially event contracts related to sports and war, have come under fire in the last several months. A number of pending lawsuits against prediction market companies are ongoing and several members of Congress have introduced legislation to limit the offerings.

Rep. Dina Titus (D-NV) introduced the Fair Markets and Sports Integrity Act in February, which aims to prohibit prediction market companies from offering sporting event or casino-style gaming contracts throughout the U.S.

Titus introduced HR 7477 on Feb. 10. If approved, a “registered entity may not list for trading, facilitate, or clear any agreement, contract, or transaction that is based on, references, or derives its value from, or otherwise involves any sporting event or athletic competition; or any casino-style game.”

Separate Bill Aims to Bar Elected Officials From Markets

Additionally, Senators Amy Klobuchar (D-MN) and Jeff Merkley (D-OR) recently introduced the “End Prediction Market Corruption Act,” a bill to ban the President, Vice President, members of Congress, and other top-federal election official from trading event contracts.

The introduced bill comes in the wake of large payouts from prediction markets stemming from U.S. strikes on Iran and Venezuela military actions.

“When public officials use non-public information to win a bet, you have the perfect recipe to undermine the public’s belief that government officials are working for the public good, not for their own personal profits,” Merkley said in a released statement. “Perfectly timed bets on prediction markets have the unmistakable stench of corruption. To protect the public interest, Congress must step up and pass my End Prediction Market Corruption Act to crack down on this bad bet for democracy.”

The bill sponsors pointed to several recent large payouts through prediction market contracts stemming from U.S. military action. According to the Wall Street Journal, a mystery trader profited $400,000 on Polymarket betting on Venezuela President Nicolás Maduro’s ousting just several hours before the U.S. took action against the country.

Additionally, NPR reported a user named “Magamyman” profited $553,000 placing bets on Polymarket regarding Iran’s Supreme Leader, Ayatolla Ali Khamenei, hours before an Israeli air strike killed him last week.