WASHINGTON, D.C.— Cantrell Dumas, Director of Derivatives Policy, issued the following statement in connection with a newly released Fact Sheet on Gambling on Elections and Event Contracts:
“Democracy in America is at a fragile crossroads, with more Americans questioning the integrity of elections than ever before. The shocking attack on the Capitol on January 6, 2021, is just one glaring example, but across the country, less visible incidents continue to chip away at the public’s confidence in our elections and democracy itself. In this shaky political moment, the last thing our country needs is for democracy to be undermined further by allowing gambling on elections.
“A recent federal court ruling in Kalshi v. CFTC has intensified this concern. In this case, a regulated prediction market successfully sued the Commodity Futures Trading Commission (CFTC) after the agency barred it from listing contracts, allowing people to bet on which political party would control Congress. The court’s decision in Kalshi’s favor now opens the door for political betting markets, raising serious questions about their potential impact on U.S. politics and the urgent need for regulatory action.
“If political event contracts are allowed, we could witness scenarios similar to what happened with GameStop or other meme stocks. Just as social media movements and speculative traders turned the stock market into a frenzy, political betting could incentivize manipulation, disinformation campaigns, and wild speculation on election outcomes. The focus would no longer be on electing the best candidate or having the outcome reflect the will of the voters but on impacting the process so that the outcome is most profitable from winning or losing a bet.
“Political event contracts would also disrupt the commodities markets and distract the CFTC from its core mission. The agency is tasked with regulating commodities markets to ensure that essential goods—from the cereal in your breakfast to the gas in your car—are available in the right amounts and at fair prices, based on supply and demand. These markets are not meant to be a casino for gamblers seeking a quick payday.”
The fact sheet is available here.
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