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A group of U.S. lawmakers, including Senators Richard Blumenthal, Chris Van Hollen, Elizabeth Warren, and Sheldon Whitehouse, along with Representatives Eleanor Holmes Norton, Jamie Raskin, and John Sarbanes, have raised alarms about the potential risks of allowing betting markets on elections. In a letter addressed to CFTC Chairman Rostin Behnam, they endorsed a proposed rule that seeks to prohibit event contracts tied to U.S. election outcomes.
Lawmakers Push Back Against Election Betting Amidst Crypto Enthusiasm
“The last thing voters need as they head to the polls is the spectre of bets placed on the outcome of their election. Voters require decisive action, as proposed by the CFTC, to help restore trust,” the lawmakers stated. They emphasised that elections should not operate as for-profit ventures and warned that without implementing this rule, voters might legitimately question whether their votes hold weight, or whether the election outcome could be swayed by substantial financial wagers.
The legislators expressed concerns that election gambling may pave the way for corruption, distort election results, and diminish voter confidence. They underscored the notion that elections are not-for-profit entities and highlighted the need to avert the commercialization of the democratic process. The letter cautioned that allowing large stakes from affluent individuals and corporations could jeopardise the electoral process’s integrity.
The Impact of Polymarket on the Democratic Process
“Election gambling fundamentally undermines the sacredness of our democratic process. Political wagers alter the incentives behind individual votes, swapping political beliefs for financial motivations,” the lawmakers articulated. “Permitting billionaires to place enormous bets while simultaneously funding a particular candidate or party, as well as enabling political insiders to gamble on elections using confidential information, would further erode public trust in the electoral system.”
The lawmakers pressed the CFTC to finalise and swiftly enact the rule aimed at preventing these concerns from passing into practice.
One clear illustration of the worries raised in the letter is Polymarket, a prediction market that operates on the Polygon blockchain and has become popular for its transparency and varied betting choices. Users on Polymarket engage by purchasing shares using USD Coin (USDC) to speculate on outcomes for events, which includes not just elections but sports and cryptocurrency values. The value of these shares fluctuates according to market sentiment, which provides a fresh dimension to the trading experience.
In July, Polymarket experienced massive growth, recording over 1.5 million bets with a total trading volume exceeding $1 billion, sparked by rising interest around the U.S. presidential election debate. Data provided indicated a 57% likelihood of Donald Trump emerging as the winner, garnering $54 million in bets, whereas Kamala Harris was seen at a 39% probability, attracting $38.5 million.
Lawmakers’ Concern Over Mounting Activity on Prediction Markets
A coalition of U.S. lawmakers has persistently called for the Commodity Futures Trading Commission (CFTC) to enact a prohibition on betting regarding American elections. The letter of concern included support from legislators such as Senators Elizabeth Warren (D-MA), Richard Blumenthal (D-CT), Chris Van Hollen (D-MD), and Sheldon Whitehouse (D-RI), alongside Representatives Eleanor Holmes Norton (D-DC), Jamie Raskin (D-MD), and John Sarbanes (D-MD).
The lawmakers highlighted the adverse effect of election gambling on public confidence and the democratic process, urging immediate actions to finalise and implement a regulatory rule aimed at safeguarding U.S. elections’ integrity. While the letter did not name specific platforms or cryptocurrencies, it followed an uptick in election-related betting on Polymarket, which saw record activity following notable events including an attempted assassination on former President Donald Trump and President Joe Biden’s withdrawal from the race for the 2024 election, nearly doubling the platform’s total trading volume to $1 billion in July.
Oregon Senator Joins Call to Prevent Crypto Election Bets
The lawmakers criticised this trend, asserting that “the last thing voters need are bets waged on the outcome of their election. Voters need decisive actions, as outlined by the CFTC in this rule, to restore confidence.” They reiterated that elections are not for-profit operations. Additionally, the representatives raised alarms about the shift of voter motivations from authentic political beliefs to financial considerations, creating considerable ethical complications.
Furthermore, they pointed out that political insiders could exploit non-public knowledge for personal profit, which would further erode public confidence in the electoral process. The letter articulated that “Enabling billionaires to make massive bets while at the same time funding specific candidates or parties, coupled with allowing political insiders to gamble based on privileged information, will only deepen the erosion of public trust in elections.”
The lawmakers implored the CFTC to act decisively to fend off what they termed the “commodification” of U.S. elections. Oregon Senator Jeff Merkley had previously penned a similar letter urging rejection of a proposal from a private prediction market operator to legitimise betting on U.S. election results, a proposal that the CFTC ultimately dismissed. Stay tuned for more updates on this evolving story on the Turkish NY Radio.
