TLDR
- US lawmakers have called on the CFTC to ban betting on US elections
- Polymarket, a decentralized prediction platform, has seen record betting volumes on the 2024 election
- Legislators argue election betting undermines democratic processes and public trust
- The CFTC previously fined Polymarket $1.4 million for offering unregistered binary options markets
- Lawmakers are concerned about potential exploitation by political insiders and wealthy individuals
A group of US lawmakers has urged the Commodity Futures Trading Commission (CFTC) to prohibit betting on American elections, citing concerns over the integrity of the democratic process.
The call comes as cryptocurrency-based prediction markets report unprecedented trading volumes related to the upcoming 2024 US presidential election.
In a letter addressed to CFTC Chair Rostin Benham, eight Democratic legislators, including Senators Elizabeth Warren, Richard Blumenthal, and Chris Van Hollen, expressed their concerns about the “commodification” of US elections.
They argued that allowing such betting could potentially influence election outcomes and erode public trust in democracy.
The lawmakers wrote, “The last thing voters need are bets waged on the outcome of that election. Voters need action, as proposed by the CFTC in this rule, to restore trust. Elections are not a for-profit enterprise.”
One platform at the center of this debate is Polymarket, a decentralized prediction market. The site has reportedly seen over $500 million in bets placed on its “Presidential Election Winner 2024” market, with an additional $319.7 million wagered on the “Democratic Nominee 2024” market.
These figures represent a significant increase in trading volume, with Polymarket’s total volume nearly doubling to $1 billion in July 2024.
The surge in betting activity followed major political events, including an attempt on former President Donald Trump’s life and President Joe Biden’s withdrawal from the 2024 presidential race.
These incidents have intensified the focus on election-related betting and its potential impacts.
The legislators raised specific concerns about wealthy individuals and political insiders potentially exploiting these markets.
They warned that billionaires could place large bets while simultaneously contributing to specific candidates or parties. Additionally, they cautioned that political insiders might use non-public information to their advantage in these betting markets.
“Allowing billionaires to wager extraordinary bets while simultaneously contributing to a specific candidate or party, and political insiders to bet on elections using non-public information, will further degrade public trust in the electoral process,” the letter stated.
This is not the first time Polymarket has faced scrutiny from US regulators. In January 2022, the platform settled with the CFTC for $1.4 million over charges of offering more than 900 unregistered binary options markets.
While the lawmakers’ letter did not specifically name any platforms, it comes amid growing concern over the role of cryptocurrency and blockchain technology in political betting.
These decentralized platforms often operate outside traditional regulatory frameworks, making them challenging to oversee or control.
As of August 2024, most cryptocurrency betting platforms show Republican candidate Donald Trump as the favorite to win the US election. However, presumptive Democratic candidate Kamala Harris has been gaining ground in recent weeks.
The CFTC has previously taken action on this issue, rejecting a proposal from a private prediction market operator that sought to legalize gambling on US election outcomes. The current push from lawmakers aims to finalize and implement a rule that would explicitly ban such practices.
With the US presidential election now just three months away, the debate over election betting and its potential impacts on the democratic process is likely to intensify.
