CFTC Heightens Oversight on Election Betting Amid Upcoming Elections

The US Commodity Futures Trading Commission (CFTC) has stepped up its watch on election betting platforms because the US elections are coming up soon. 

CFTC Keeps Watch on Political Prediction Markets as Kalshi Appeals Decision

CFTC Chairman Rostin Behnam told Bloomberg Television that the agency plays a part in keeping an eye on political derivatives markets even as it tries to stop these activities in court. Behnam said the CFTC acts like an “elections cop,” keeping tabs on political prediction markets on sites such as Kalshi and Polymarket.

Kalshi, a platform that lets people bet on how elections will turn out, has been at the center of the CFTC’s legal fights. In September, a federal court ruled that Kalshi could keep offering its political contracts even though the CFTC was trying to stop such operations. The commission is now appealing this decision hoping to put an end to the platform’s ability to offer financial contracts tied to elections.

Sites like Kalshi and PredictIt have caught more attention as Election Day gets closer. These platforms let people buy contracts based on future political events. Unlike regular sportsbooks, which cannot offer bets on elections, these sites work as derivatives trading. This puts them under the CFTC’s control. Behnam says the commission will keep taking action against anyone breaking its rules.

Regulators Focus on Polymarket as Foreign Bets Raise Election Integrity Fears

Crypto-based betting platforms like Polymarket face closer examination than regulated ones. Polymarket has caught the eye of regulators because some users from other countries are wagering millions on who will win the presidency. This foreign involvement in these markets worries some people, who think these bets might sway public opinion during election season.

At the Bloomberg Global Regulatory Forum, Behnam spoke about the CFTC’s struggle to enforce its rules on political betting markets. While Kalshi and PredictIt still answer to the CFTC, the commission finds it hard to keep tabs on platforms that do not fall under its jurisdiction such as Polymarket.

The CFTC previously raised concerns that election betting could open the door to market manipulation, further undermining public confidence in the fairness of elections.

The agency argues that individuals or groups might attempt to sway betting markets to create misleading perceptions of political outcomes, which could exacerbate existing doubts about election integrity. With trust in elections already fragile due to recent disputes, the CFTC sees the risks of election wagering as potentially damaging to public perception and the democratic process.