A group of Democratic lawmakers, led by Senator Elizabeth Warren (D-Mass.), has called on the U.S. Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam to swiftly finalize a rule banning event contracts that allow betting on political outcomes.
What Happened: In a letter sent on Monday, the lawmakers expressed their concerns, stating that such bets “cheapens the sanctity of our democratic process,” according to The Block.
The letter, signed by Senators Jeffrey Merkley, Sheldon Whitehouse, Chris Van Hollen, Richard Blumenthal, and Representatives Jamie Raskin, John P. Sarbanes and Eleanor Holmes Norton, argued that political betting alters the motivations behind voting.
“Political bets change the motivations behind each vote, replacing political convictions with financial calculations,” they wrote. “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.”
The lawmakers urged the CFTC to “promptly finalize and implement this rule to prevent the commodification of U.S. elections.”
The CFTC had voted in May to propose a rule that would ban event contracts on political contests and other sensitive areas, including gaming, war, terrorism, and assassination.
If finalized, these contracts would be prohibited from being listed for trading or accepted for clearing by a CFTC-registered entity.
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Why It Matters: Event markets like Kalshi and Polymarket currently allow users to bet on the outcomes of various future events, including U.S. elections. Behnam noted a “significant uptick” in such event contracts listed on CFTC-registered exchanges since 2021.
“As we approach the 2024 election, voters already face a political system that allows the richest individuals and corporations to funnel dark money into campaigns without disclosure,” the lawmakers highlighted.
“The threat of violence and extremism is high, and the U.S. remains a target for foreign actors who have sought to meddle in our elections. The last thing that voters heading to the polls need are bets waged on the outcome of that election.”
Furthermore, the lawmakers pointed out that the CFTC does not have a congressional mandate to regulate election and campaign activities.
Behnam has previously echoed this sentiment, stating that allowing contracts on political events would extend the CFTC’s responsibilities beyond its Congressional mandate and expertise.
What’s Next: These developments and their implications for the future of digital assets will likely be a significant topic of discussion at Benzinga’s Future of Digital Assets event on Nov. 19.
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