Members of Congress are hurrying to establish new regulatory guardrails for online prediction markets following a series of alleged insider trading scandals. More than a dozen bills have been introduced this year aimed at regulating betting markets, according to the Congressional Research Service. Not one has made meaningful progress toward becoming law.
As with cryptocurrency and artificial intelligence, this is proving to be yet another emerging tech policy area in which Congress finds itself struggling to stay ahead of the curve. The latest proposal, from Rep. Ritchie Torres (D-N.Y.), would ban the use of campaign funds to bet on prediction markets.
A $30,000 bet on the capture of former Venezuelan President Nicolas Maduro in January sparked a public furor over possible insider trading. Last month, a U.S. soldier was charged with using classified information to profit by more than $400,000 from such a wager.
Political candidates, campaign staffers, and others with access to material non-public information have reportedly placed bets on markets related to their work. The flurry of legislative activity underscores the growing concern that these platforms operate in a regulatory vacuum.
Critics argue the bills may overreach and stifle innovation in a nascent industry that provides unique data on world events. Without a clear path to passage, Congress risks letting the current scandals fade without meaningful reform.