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

MeNews · 2026-04-02T19:59:40+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 19:59:40

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ME News message, March 31 (UTC+8), predicts that the market in the United States is undergoing rapid expansion, with monthly trading volume growing from $1.2 billion at the beginning of 2025 to more than $20 billion one year later. Political contracts and sports contracts are the primary trading categories. But the industry is also facing pressure from Congress, with more than six legislative proposals, most driven by Democratic lawmakers and some receiving bipartisan support. These bills cover multiple directions: the STOP Corrupt Bets Act would broadly ban contracts related to elections, government actions, sports, and military operations; the Public Integrity in Financial Prediction Markets Act would prohibit government employees from placing bets using insider information, with its scope including the president, the 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. Several states have sued Kalshi, a Nevada court has halted 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 its agency is moving forward with formal rulemaking for regulation. TRM Labs analysis shows that in prior prediction contracts related to U.S. military actions against Iran, four wallets that previously had almost no trading history profited $872,000 after placing bets of about $40,000, raising questions about insider trading. Currently, the probability on Polymarket that Democrats will regain the House is 85%. If Democrats win in the 2026 midterm elections, the push to advance the above legislation may intensify. (Source: ODAILY)

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