Raskin and Merkley Propose Legislation to Outlaw Election, War, and Government Prediction Markets

(AsiaGameHub) –   Capitol Hill witnessed a flurry of activity surrounding prediction markets on Thursday, as legislative pressure on event contract exchanges reached new heights. Lawmakers unveiled two separate proposals to limit the sector from different regulatory vantage points, including the STOP Corrupt Bets Act.

Rep. Jamie Raskin (D-MD) and Sen. Jeff Merkley (D-OR) introduced the bicameral legislation, which takes aim at prediction market contracts linked to elections, military operations, and government actions, marking it as one of the most sweeping proposals directed at the rapidly expanding industry. 

The measure was introduced on the same day that Sens. Elissa Slotkin (D-MI), Todd Young (R-IN), Adam Schiff (D-CA), and John Curtis (R-UT) put forth separate bipartisan legislation concentrating on insider trading by government officials, illustrating the swift acceleration of efforts to regulate prediction markets in Washington. 

The simultaneous introduction of these bills indicates that lawmakers are implementing a coordinated, multi-pronged strategy to address prediction markets from various angles rather than pushing a single, unified measure.  

If this tactic proves successful, it would lead Congress to impose restrictions on an industry that Schiff has dubbed the “Wild West.” 

Legislation Targets Wagering on Elections, Warfare and Governmental Actions

The STOP Corrupt Bets Act is broader in scope than several recent proposals. Rather than adopting a narrow focus on ethics or market integrity, this legislation would prohibit entire categories of event contracts. 

As drafted, it would modify the Commodity Exchange Act to bar registered entities from listing or trading contracts covering specific “matters described,” including elections, sporting events, and military actions that the bill’s sponsors maintain lack commercial hedging value and essentially operate as unregulated gambling.

The measure extends further than other proposals that merely restrict government officials, as it prohibits all individuals from placing such wagers. 

The legislation expressly bans event contracts on:

• Political elections or contests
• Governmental actions taken by the executive, legislative, or judicial branches
• Sporting events or athletic competitions
• Military operations conducted by the United States or any foreign nation

In the announcement releasing the bill, Raskin stated:

“The oligarchs and opportunists are using prediction markets like Kalshi and Polymarket to enrich themselves. 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.” 

The proposed legislation specifically targets event contracts that could be influenced or even known beforehand by government insiders, as well as those that might present a risk to national security. 

Lawmakers have increasingly expressed concerns that markets related to warfare and geopolitics could create perverse incentives or expose vulnerabilities in the handling of sensitive information. 

The bill includes a narrow exception for contracts used for “hedging or mitigating commercial risk,” but assigns the Commodity Futures Trading Commission with defining the specific parameters. 

This measure draws a clear line around which events should be completely prohibited, rather than regulating how participants engage with them, making it one of the most aggressive proposals to date. 

If enacted, the legislation would require the Government Accountability Office to study the impact of prediction markets on young people, insider trading, and related issues.

Legislators Employ Various Tactics as Bills Accumulate

The current approach to prediction markets on Capitol Hill could be characterized as a “death by a thousand cuts” strategy. Lawmakers have introduced various bills, many with overlapping objectives and even overlapping sponsors. For example, Sens. Schiff and Curtis are challenging the industry from multiple legal perspectives simultaneously, with both co-sponsoring more than one proposal targeting prediction markets.

This layered approach might ensure that if one of the bills fails to gain traction or faces constitutional challenges, another might survive. While some legislation focuses on the ethics of government officials trading on nonpublic information, other bills address regulatory “backdoors” by reclassifying event contracts as traditional sports betting or casino-style gambling.

Additionally, Sens. Richard Blumenthal (D-CT) and Andy Kim (D-NJ) have introduced the Prediction Markets Security and Integrity Act, which merges insider trading prohibitions with restrictions on war-related bets and specific consumer protections like age verification and credit card bans.

Above all, the multiple measures demonstrate that Congress is committed to eliminating loopholes in the current regulatory framework.