Democratic Representative Jamie Raskin believes that distrust in the electoral system in the U.S. is at an all-time high. He and Andrea Salinas, another democratic representative, have introduced a bill to Congress to ban election betting in the U.S. This legislation is similar to a bill introduced at an earlier stage by Senator Jeff Merkley.
Growing efforts are being made to regulate trading platforms and prediction markets that explore election-related betting options. The proposed bill would amend the Commodity Exchange Act (CEA). It would bar any federally regulated entities from offering agreements, contracts, transactions, or swaps involving political elections or contests.
Reports show that almost $1bn was wagered on the 2024 US elections across major prediction platforms. Days before the election, even the stock trading platform Robinhood started offering its own election betting market.
Playing roulette with democracy
In a democracy, the processes of casting ballots and tallying results must be reliable and transparent. Raskin believes that placing bets and gambling odds can cloud the process. He sees the legislation as common sense.
Salinas says that it’s playing roulette with democracy to allow this kind of wagering without weighing up the potential consequences. She believes election betting sets a dangerous precedent. It can incentivize bad actors to interfere with or try to influence election systems.
Today it has become extremely convenient for a sports bettor to use an app and a mobile device to wager at an online sportsbook. The popularity of online casinos and online sportsbooks keeps growing. Salinas not only sees the need for regulatory clarity but for more federal resources for gambling addiction treatment.
The fight over political prediction markets continues
When gambling in online casinos takes place on only legit websites consumers have more protection than when gambling on illegal sites. Seven states in the U.S. currently allow online gambling and 30 allow online sports betting.
Prediction market platforms such as Kalshi and Independent Brokers argue that event-based derivative contracts on elections should be classified differently to gambling. They should be regulated as financial instruments.
Critics, including lawmakers and advocacy groups, counter that allowing bets on elections can lead to manipulation. Senator Merkley compares it to practicing sports betting with a rigged system. He likens it to betting on a baseball game when you control the umpire. He believes it downgrades elections from an investment in leadership to a game to maximize profits.
The legislative path is uncertain
Considering the recent election results and the new Congress that will be sworn in on January 3rd, any immediate progress on the act to ban election gambling is unlikely. The legislative path going forward appears to be uncertain.