CFTC Heightens Scrutiny of Election Betting Ahead of Polling Day
With the upcoming US elections drawing near, the Commodity Futures Trading Commission (CFTC) has said that it is intensifying its surveillance of election betting platforms.
LISTEN TO THIS ARTICLE:CFTC Chairman Rostin Behnam, in an interview with Bloomberg Television, spoke of the agency’s role in monitoring political derivatives markets, despite ongoing efforts to restrict such activities in court. Behnam likened the CFTC to an elections cop, explaining that the agency keeps a close eye on platforms such as Kalshi and Polymarket, which offer political prediction markets.
CFTC Appealing Kalshi Ruling
Kalshi, a platform where users can bet on election outcomes, remains central to the CFTC’s legal battles. In a September ruling, a federal court allowed Kalshi to continue offering its political contracts, despite the CFTC’s attempts to halt them. The commission is now appealing this decision, seeking to block the platform from providing financial contracts tied to election results.
As Election Day approaches, platforms such as Kalshi and PredictIt have attracted increased attention. These services let users buy contracts based on predictions about future political events. These platforms operate as derivatives markets, bringing them under the CFTC’s regulation. Behnam has stated that the agency will continue to take action against entities violating its rules.
Crypto-based platforms like Polymarket are facing more scrutiny than regulated counterparts. Polymarket has drawn particular attention from regulators due to foreign users placing significant wagers on the outcome of the presidential race. This overseas participation raises concerns among some observers, who fear that such betting could influence public perception as the election approaches.
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CFTC Unable to Oversee Unregulated Services
During the Bloomberg Global Regulatory Forum, Behnam discussed the CFTC’s efforts to enforce its regulations on political prediction markets. While the agency can exercise authority over platforms like Kalshi and PredictIt, it struggles to oversee unregulated services such as Polymarket, which lie outside its jurisdiction.
The CFTC has previously warned that election betting could open the door to market manipulation, further damaging public trust in the electoral process. The agency argues that individuals or groups might try to manipulate betting markets to create misleading impressions of political outcomes, exacerbating existing concerns about election integrity. Given the current state of public confidence in elections, the CFTC views the risks associated with election wagering as potentially harmful to both public perception and the democratic system.
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