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

MeNews · 2026-04-02T23:13:25+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 23:13:25

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ME News update, March 31 (UTC+8). The forecast market is experiencing rapid expansion in the United States, with monthly trading volume rising from $1.2 billion at the start of 2025 to more than $20 billion one year later. Political contracts and sports contracts are the primary traded asset categories. But the industry also faces pressure from Congress, with more than six legislative proposals, most driven by Democratic lawmakers, and some receiving bipartisan support.

These bills cover multiple areas: The STOP Corrupt Bets Act proposes a comprehensive ban on contracts related to elections and government actions, as well as sports and military actions. The Public Integrity in Financial Prediction Markets Act prohibits government employees from placing bets using insider information, covering 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. The Prediction Markets Are Gambling Act, meanwhile, supports states in including sports event contracts within gambling regulatory oversight.

Several states have filed lawsuits against Kalshi, a Nevada court has paused Kalshi’s operations in the state, and Arizona’s attorney general has brought 20 criminal charges against Kalshi. CFTC Chair Mike Selig argues that the federal government has exclusive jurisdiction over prediction markets, and the agency is pushing forward formal rulemaking for regulation.

TRM Labs analysis shows that, in prediction contracts related to earlier U.S. military actions against Iran, four wallets that previously had almost no trading history placed bets totaling about $40,000 and profited $872,000, raising concerns about insider trading. Currently, the probability on Polymarket that Democrats will regain the House is 85%; if Democrats win the midterm elections in 2026, the push to advance the above legislation may intensify. (Source: ODAILY)

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