Prediction markets face legislative crackdown; if the Democrats regain Congress in 2027, regulatory pressure may increase.

ME News message, March 31 (UTC+8), predicts that the market in the United States is undergoing rapid expansion; monthly trading volume has grown from $1.2 billion at the beginning of 2025 to more than $20 billion a year later. Political contracts and sports contracts are the main categories of tradable instruments. But the industry is also facing pressure from more than six legislative proposals in Congress, most of which are driven by Democratic lawmakers and some of which have bipartisan support. These bills cover multiple directions: the STOP Corrupt Bets Act would broadly ban contracts related to elections and government conduct, sports, and military actions; the Public Integrity in Financial Prediction Markets Act would prohibit government employees from using insider information to place bets, applying to the president, vice president, cabinet members, and members of Congress; the BETS OFF Act targets trades involving sensitive events such as war, terrorism, and assassination; the Prediction Markets Are Gambling Act would support states in bringing sports event contracts under gambling regulatory oversight. Multiple states have filed lawsuits against Kalshi, a Nevada court has paused Kalshi’s operations in that state, and Arizona’s attorney general has brought 20 criminal charges against Kalshi. CFTC Chair Mike Selig, meanwhile, argues that the federal government has exclusive jurisdiction over prediction markets, and his agency is moving forward with the drafting of formal regulatory rules. TRM Labs analysis shows that in prior U.S. prediction contracts related to Iran’s military actions, four wallets that had previously had almost no trading records placed bets of about $40,000 and earned profits of $872,000, raising concerns about insider trading. At present, the probability on Polymarket that Democrats will regain the House is 85%; if Democrats win in the 2026 midterm elections, the momentum for advancing the above legislation may increase. (Source: ODAILY)