Prediction markets face legislative crackdown; if the Democrats regain Congress in 2027, regulatory pressure may increase.

MeNews · 2026-04-02T22:50:40+00:00

The U.S. prediction market is rapidly expanding, with trading volume expected to grow from $1.2 billion at the beginning of 2025 to $20 billion. The industry faces six legislative pressures, mostly driven by the Democratic Party, concerning issues such as election and political contract bans, with some states already filing lawsuits against Kalshi. The CFTC chairman advocates for increased regulation.

MeNews

2026-04-02 22:50:40

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ME News update, March 31 (UTC+8). The predicted market is seeing rapid expansion in the United States: monthly trading volume has grown from $1.2 billion at the beginning of 2025 to more than $20 billion a year later. Political contracts and sports contracts are the main trading categories. But the industry is also facing pressure from Congress, with more than six legislative proposals—most driven by Democratic lawmakers, with some gaining bipartisan support. These bills cover multiple areas: the STOP Corrupt Bets Act would comprehensively ban contracts related to elections, government conduct, sports, and military actions; the Public Integrity in Financial Prediction Markets Act would prohibit government employees from using material nonpublic information to place bets, applying to the President, Vice President, Cabinet members, and members of Congress; the BETS OFF Act targets trades involving sensitive events such as war, terrorism, and assassination; and the Prediction Markets Are Gambling Act would support states in bringing sports event contracts under gambling regulatory oversight. Multiple states have sued Kalshi, a Nevada court has paused Kalshi’s operations in that state, and Arizona’s attorney general has filed 20 criminal charges against Kalshi. CFTC Chair Mike Selig, meanwhile, argues that the federal government should have exclusive jurisdiction over prediction markets, and his agency is moving forward with formal rulemaking for regulation. TRM Labs analysis shows that in prediction contracts tied to the United States’ military action against Iran, four wallets that previously had almost no trading history placed bets totaling about $40,000 and profited $872,000, raising allegations of insider trading. At present, Polymarket’s probability that Democrats will regain the House is 85%. If Democrats win in the midterm elections in 2026, the momentum behind the above legislation may further increase. (Source: ODAILY)

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