Lawmakers Advocate for Electoral Integrity

Several Democratic lawmakers are pressing the Commodity Futures Trading Commission (CFTC) to finalize a proposed rule banning gambling in US elections. The push aims to protect public trust, maintain electoral integrity, and safeguard the sanctity of democratic processes.

The move to prohibit election-outcome gambling came after crypto prediction platform Polymarket hit $1 billion in betting volume. Approval of a ban on election betting might hamper Polymarket's impact and reduce gains.

Leading the Charge

Senator Jeff Merkley, Senator Elizabeth Warren, and other vital legislators are leading the move. The lawmakers seek to protect the integrity of the electoral process and restore public trust. In a letter sent to CFTC Chairman Rostin Benham on August 5, they expressed their concerns about Wall Street's influence on election outcomes.

Concerns Over Wall Street Influence

The lawmakers argue that allowing massive political betting markets could interfere with elections and erode public trust in democracy.

"As we approach the 2024 election, voters face a political system that allows the wealthiest individuals and corporations to funnel dark money into campaigns without disclosure.

The threat of violence and extremism is high, and the US remains a target for foreign actors who have sought to meddle in our elections," the lawmakers wrote.

The Dangers of Election Gambling

Furthermore, the lawmakers' letter articulates the dangers posed by election gambling, which they believe fundamentally cheapens the sanctity of the democratic process.

They argue that political bets shift motivations from political convictions to financial calculations, thus degrading public trust in elections.

They added, "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."

Support for the Proposed Rule

The letter also supports the CFTC's proposed rule by emphasizing that the outcome of political contests constitutes "gaming" and is contrary to the public interest.

The lawmakers argue that political event contracts do not serve the economic purpose of futures markets and that the CFTC does not have the congressional mandate to regulate election and campaign activity.

Additionally, many states already prohibit betting on elections, and offering such bets at the federal level could unlawfully pre-empt state responsibilities.

Previously, Senator Merkley has led a letter to the CFTC urging the agency to reject a proposal by a private prediction market operator to allow legal gambling on US elections.

However, on his official page, Senator Merkley stated that "the CFTC ultimately disapproved of the proposal."

The Impact of Prediction Markets

The letter does not mention specific platforms but follows a record-high for prediction market platform Polymarket.

According to data from a Dune dashboard, Polymarket's monthly volume reached $387.03 million in July. This surge is driven by heightened anticipation and discussion around the upcoming US elections in November.