US Congress Proposes Ban on Election Betting
The ban on election betting has gained attention after millions were gambled on the 2024 US presidential elections. In response, Representatives Jamie Raskin (MD-08) and Andrea Salinas (OR-06) introduced the "Ban Gambling on Elections Act" on December 19, 2024, to prohibit wagering on US elections. The bill aims to address concerns over election integrity and potential manipulation caused by betting.
The Rationale for the Ban
The primary motivation for the ban on election betting is to avoid portraying elections as a form of entertainment or financial speculation. According to Raskin, democracy necessitates a trustworthy and transparent system. However, electoral betting undermines these critical aspects by encouraging a profit-motivated initiative. He claims that the practice creates a system influenced by betting odds, undermining the fundamentals of democracy.
Salinas shares these sentiments, arguing that election betting sets a dangerous precedent with potentially serious consequences. She claims that allowing this type of betting in elections is equivalent to playing roulette with the country's democracy. As a result, she vows to continue her fight against gambling addiction in order to assist all those suffering from this societal issue.
These lawmakers' sentiments highlight the importance of maintaining the integrity of the country's elections. If passed, the legislation will provide an additional layer of protection to elections, ensuring that they are not viewed as a commodity for speculation.
Key Details of the Ban on Election Betting
According to reports, election prediction websites Kalshi and ForecastEX made a combined +$900 million worth of bets on legislative and presidential elections. Another website, Polymarket, which operates outside the United States, accepted more than $3.7 billion in wagers on presidential elections alone. This prompted other websites, including DraftKings, to express an interest in entering this betting market.
The proposed regulation solely aims to limit the growth of prediction markets. It accomplishes this by prohibiting all agreements, swaps, contracts, or transactions involving political elections in states where sports betting is legal.
The bill is also the House version of Senator Jeff Merkley's legislation in the Senate. It would effectively amend the Commodity Exchange Act to prohibit legal betting on election outcomes. The bipartisan efforts of both the Senate committee and the House of Representatives demonstrate lawmakers' broader commitment to protecting elections from manipulation by betting interests.
Industry Responses to the Ban
It comes as no surprise that the bill was met with mixed feelings. Critics said stakeholders and operators would be prevented from innovating or providing more options to consumers. From their perspective, betting on non-sports events like elections was a natural and excellent way to broaden their offerings. As the sector grows, these opponents believe there will be a high demand for professionals in regulatory and compliance roles within the industry.
A US court ruling in October 2024 cleared the way for Kalshi to launch betting markets on congressional control and presidential outcomes, opening the door for US citizens to bet on political outcomes. Following these decisions, it is no surprise that Kalshi is leading the charge against the ban. They believe that these markets provide a regulated platform for valuable predictive data. Placing a ban would only push these activities into unregulated markets, increasing the risk of manipulation and massive revenue for American states.
Supporters of the ban also make several arguments. Kalshi supports the creation of a regulatory body to monitor election betting and opposes the ban, as already noted. But its counterpart in regulations, the Commodity Futures Trading Commission (CFTC), supports the ban. The regulatory body cautions that allowing such election markets could erode public confidence and possibly compromise the integrity of the voting system.
A nonprofit organization, Better Markets, which advocates strict financial regulation, is adding a crucial voice to the proposal. Dennis Kelleher, the CEO of the company, said that allowing election wagering would erode the faith and trust American people have placed in the voting process. Furthermore, he said allowing election wagering would divert the CFTC from focusing on its primary goal of safeguarding commodity markets.
Ethical Considerations of Election Betting
With millions of dollars at stake, the ban raises a number of complex ethical concerns. For example, bettors may be swayed to vote for the side that best serves their financial interests. This would create opportunities for manipulation, outside interference, and corruption, which, according to the bill's sponsors, undermines election integrity.
Conclusion
The "Ban Gambling on Elections Act" is a contentious bill that raises an important issue for debate in America’s society. According to supporters, the bill aims to protect the integrity of US national elections. In contrast, stakeholders and operators in election prediction markets believe that the bill stifles innovation and consumer choice. Despite their opposing viewpoints, both sides are committed to protecting elections as a democratic process and will continue to shape debates on the subject in order to reach a mutual understanding.
References:
Jamie Raskin (MD-08): U.S. Congressman advocating for election integrity through the "Ban Gambling on Elections Act." Learn more.
Andrea Salinas (OR-06): Co-sponsor of the bill, focusing on safeguarding democracy and combating gambling addiction. Read her statement.
Senator Jeff Merkley (D-OR): Introduced the Senate version of the legislation to ban election betting. Details here.
Kalshi: Predictions market operator leading efforts against the ban, emphasizing the value of regulated data. More info.