Yet Another Federal Bill Introduced to Prohibit Sports Event, Election, and War Prediction Market Contracts

• The STOP Corrupt Bets Act will prohibit prediction market contracts on elections, government actions, sports, and military actions
• Rep. Jamie Raskin (MD-08) and Senator Jeff Merkley (D-OR) introduced the legislation
• Particular markets are “ripe for corruption and erode public trust”

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Stop me if you’ve heard this one before, but a federal bill has been introduced to ban prediction market contracts surrounding elections, government actions, sports, and military actions.

Rep. Jamie Raskin (MD-08) and Senator Jeff Merkley (D-OR) introduced the STOP Corrupt Bets Act, which if signed into law will prohibit event contracts on elections, government actions, sports, and military actions.

“The oligarchs and opportunists are using prediction markets like Kalshi and Polymarket to enrich themselves. But democracy isn’t about insider gambling on our common future, it’s about everyone making our common future together. Placing bets on public policy and political events informed by insider knowledge and insider manipulation spreads civic cynicism and distrust in our democratic institutions,” Rep. Raskin said in a release. “By banning bets on elections, legislation, acts of war and other government actions, we can oppose corrupt attempts to rig our democracy and profit from the fix, and we can redeem public faith in the idea that government is an instrument for the common good and not a casino.”

Markets Ripe For Corruption

The bill is the second federal bill to be introduced this week to prohibit sports event contracts. Sens. Adam Schiff (D-Calif.) and John Curtis (R-Utah) on Monday introduced the Prediction Markets Are Gambling Act, a bill to prohibit Commodity Futures Trading Commission registered entities to offer sports event contracts, or any contracts that resemble a sports bet or casino-style game.

Sen. Merkley said the markets prohibited in his legislation are “ripe for corruption.”

“When anyone can use prediction markets to make a well-timed bet on Congress passing a bill, government decisions, or a military strike, it’s ripe for corruption and erodes public trust,” Sen. Merkley said. “The STOP Corrupt Bets Act restores the original intent of prediction markets and prevents these markets from further eroding our democratic institutions and turning them into a casino. I’m ready to work with my colleagues on both sides of the aisle to crack down on this bad bet for democracy and restore our vision of government ‘of, by, and for the people,’ not government ‘of, by, and for the powerful.'”

The STOP Corrupt Bets Act would prohibit event contracts based on elections and their outcomes, government actions across all branches unless there’s a commercial hedging need, sports, and U.S. or foreign military actions.

The bill also clarifies that the intent of Congress in the original statute was that these markets are already against the intent of the Commodity Exchange Act, and the Commodity Futures Trading Commission must enforce and prevent markets that do not have a commercial hedging value to prevent unregulated gambling.

Additionally, the bill requires the non-partisan, independent Government Accountability Office (GAO) to conduct a study on prediction markets, insider trading, its impact on children, and how Congress can prevent offshore illegal bets.

The STOP Corrupt Bets Act is cosponsored by U.S. Senators Elizabeth Warren (D-MA), Richard Blumenthal (D-CT), Chris Van Hollen (D-MD) and Sheldon Whitehouse (D-RI).

Latest Federal Prediction Market Prohibition Bill

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.

Reps. Blake Moore (R-UT) and Salud Carbajal (D-CA) earlier this month also introduced a bill to prohibit the trading of all event contracts related to sports, terrorism, assassination, war, election outcomes, 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.”

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.

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.”