In Atlantic City, the Commodities and Futures Trading Commission is advocating for the prohibition of allowing individuals to bet on the outcomes of U.S. elections. The agency expresses concerns that permitting such bets could lead to manipulation of the betting markets, potentially worsening the fragile confidence voters have in the integrity of election results.
The commission’s efforts are targeted at preventing New York startup company Kalshi from continuing to offer bets on the upcoming congressional elections this fall. The company briefly accepted bets on the election outcomes, but these bets are currently on hold as a federal appeals court reviews the situation.
The core issue revolves around whether companies like Kalshi should be allowed to issue predictive futures contracts, similar to yes-no wagers, on election results. While regulated in the U.K., this practice is presently prohibited in the U.S. The commission warns of possible misinformation and collusion attempts to manipulate these betting markets, which could significantly impact the perceived integrity of elections, especially at a time when confidence in the process is already low.
Citing previous instances of manipulation on unapproved platforms, the commission highlights the potential risks associated with election gambling. It recalls cases where false information influenced betting markets, emphasizing the need to safeguard election integrity and prevent such occurrences from recurring.
Unlike unregulated platforms, Kalshi sought regulatory oversight for its election bets to ensure government approval. The company argues that confining all election trading activities to unregulated exchanges would not benefit election integrity. However, the commission dismisses this argument as simplistic, emphasizing the grave threat that election gambling on U.S. futures markets poses to election integrity.
Before the temporary closure of betting, market trends suggested that bettors were leaning towards the GOP regaining Senate control and the Democrats securing a victory in the House. The odds indicated that a $100 bet on Republican Senate control would yield $129, while a $100 bet on Democratic House control would pay $154.
