Democrats Ask Commodity Futures Trading Commission to Reject Elections Betting
A group of 6 Democratic Senators in the US Federal government are pleading a regulatory agency to keep standing against the purchasing and selling of stocks linked to political happening through betting exchanges.
PredictIt, the principal player in the US online betting exchange market, facilitates exchanging stocks related to predicted political outcomes. While conventional bets on political occurrences are forbidden nationally, PredictIt has been functioning legally since 2014, having received a "No-Action" pardon letter from the US Commodity Futures Trading Commission (CFTC).
The CFTC is an independent organization responsible for ensuring that the Commodity Exchange Act is observed in all American-centered commercial ventures. The Commodity Exchange Act, signed into law by President Franklin D. Roosevelt on June 15, 1936, prohibits deceitful behavior in the trading of futures, swaps, and other derivatives.
The CFTC pulled back its no-action relief letter from PredictIt a year ago, leading the online political betting website to pause building new betting markets. But just last month, the US Fifth Circuit Court of Appeals decided in favor of PredictIt and ordered a lower court to prevent the CFTC from taking any further steps against the online political betting site.
Election Integrity
Once PredictIt's future became unclear, another online betting exchange, Kalshi, tried to obtain similar leniency from the CFTC. Kalshi notified the CFTC in June that it planned to provide political markets.
Kalshi currently allows users to bet on forecasting US news, such as the expected price of a gallon of gas in 6 months. Kalshi is a for-profit platform, whereas PredictIt is a nonprofit. Both enterprises charge commissions on winning bets.
PredictIt asserts that its betting lines provide valuable insights into political races and events, very similar to traditional polling. Insights from PredictIt are frequently utilized by academics worldwide.
On August 2, 2023, in a letter to CFTC Chairman Rostin Behnam, six Democratic US Senators petitioned the commodities agency to continue opposing online outlets that enable buying and selling of political events. The signatories were Senators Jeff Merkley (D-Oregon), Sheldon Whitehouse (D-Rhode Island), Ed Markey (D-Massachusetts), Elizabeth Warren (D-Massachusetts), Chris Van Hollen (D-Maryland), and Dianne Feinstein (D-California).
PredictIt caps bettors at a maximum of $850 on each individual market, better known as contracts. Kalshi limits wagers to $25,000 per position. The CFTC acknowledged the New York-based betting exchange in November 2020.
In requesting the CFTC to hinder Kalshi from introducing political markets, the US senators argue that such betting jeopardizes the integrity of elections.
The CFTC has never authorized a for-profit firm to conduct a political event contract, nor has the agency permitted any organization to conduct a political event contract of that size. Permitting a substantial, for-profit political event betting industry in the US by sanctioning Kalshi's requested contracts would profoundly infringe on the fairness and democratic significance of elections, the senators assert.
The senators believe the introduction of financial incentives into the electoral process "fundamentally transforms the rationale behind each vote, potentially replacing political convictions with financial assessments."
Billionaires Addressed
The six Democratic Senators offered a hypothetical scenario explaining why they are opposed to political betting exchanges.
"Billionaires could magnify their existing outsized influence over politics by placing large bets while simultaneously donating to a particular candidate or party," the letter read. "There are strong ethical concerns due to political insiders—aware of private information—utilizing their inside information to profit at voters' expense."
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Source: www.casino.org
