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

ME News Update, March 31 (UTC+8), predicts the market is currently seeing 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 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 receiving bipartisan support. These bills cover multiple directions: the STOP Corrupt Bets Act proposes a comprehensive ban on contracts related to elections, government actions, sports, and military operations; the Public Integrity in Financial Prediction Markets Act prohibits government employees from placing bets using insider information, 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 supports states in bringing sports event contracts under gambling regulatory oversight. Several states have sued Kalshi, a Nevada court has paused Kalshi’s operations in that state, and Arizona’s attorney general has brought 20 criminal charges against Kalshi. CFTC Chair Mike Selig, meanwhile, argues that the federal government has exclusive jurisdiction over prediction markets, and his agency is moving forward with drafting formal regulatory rules. TRM Labs analysis shows that in prior U.S. prediction contracts regarding Iran’s military actions, four wallets that previously had almost no trading history made profits of $872,000 by placing bets of about $40,000, raising concerns about insider trading. Currently on Polymarket, the probability of Democrats regaining control of the House is 85%; if Democrats win the 2026 midterm elections, the push for the above legislation could intensify. (Source: ODAILY)