Senator pitches prediction market regulation bill to Congress

• Sen. Richard Blumenthal has introduced the Prediction Markets Security and Integrity Act, arguing that the fast-growing industry is largely unregulated and may be bypassing state gambling laws
• The bill aims to introduce federal safeguards, including rules against insider trading and market manipulation, bans on markets tied to war or death, and stricter age verification and advertising standards
• Lawmakers and industry groups warn that prediction markets could pose national security risks, citing suspicious trading activity around military operations and concerns that sensitive information could be exploited

As scrutiny of prediction markets grows, along with concerns over their safety and reach, and trade groups such as "Gambling Is Not Investing," citing fears over these platforms’ implied risks for national security, lawmakers are rising to the challenge and pushing for stronger safeguards.

Comprehensive regulation of prediction markets covering the main fault lines pitched in Congress

The latest to have done so is Sen. Richard Blumenthal, who believes the issue needs to be addressed now. Matters are more serious than the mere regulatory status of prediction markets, i.e., whether they constitute a form of gaming or not.

"Prediction markets have grown into a multi-billion-dollar unregulated industry, ignoring state gambling laws while operating businesses identical to traditional sportsbooks by letting people bet on real-world events," the official press statement said.

The bill seeks to enact federally-enforced rules concerning insider trading and market manipulation, as well as ban prediction markets that are tied to military action, war, or death.

An Institute of the Study of War, a respected Washington-based think tank, was caught editing maps on the war in Ukraine to secure a prediction market payout.

Further conditions have to do with age verification and a ban on advertising to underage individuals or people on the self-exclusion list, along with "minimum federal standards with respect to advertising, affordability, and artificial intelligence" for states that offer a sports betting program.

Crucially, the Commodities Futures Trading Commission should drop its claim and attempts to preempt state gambling regulations, which the senator and his co-sponsor believe better describe prediction markets currently.

According to the senator, prediction markets have created an ecosystem where insider trading and market manipulation have been made possible, along with underage gambling and even threats to national security.

The trade group Gambling Is Not Investing, led by former White House and Donald Trump Chief of Staff, former Rep. Mick Mulvaney, has similarly insisted that prediction markets could be used to tip off adversaries about pending military action taken by the United States and its allies.

Senator seeks to address insider trading, market manipulation, and underage gambling

Suspicious market movements were registered on the special operation in Venezuela that seized the country’s de jure illegitimate President, Nicolás Maduro, along with Israeli strikes on Iran, both of which are suspected of having been leaked by insiders with knowledge of classified information.

As prediction markets are now a multi-billion dollar business, poised to continue growing, the Prediction Markets Security and Integrity Act is tipped to address these concerns:

"Prediction markets have become a haven for insider trading, market manipulation, and underage gambling. These billion-dollar businesses are turning war into a casino game, and creating a market for national security leaks."

Sen. Blumenthal believes that his bill will put the necessary checks and balances on the industry, which he has described as "out of control."

The bill’s co-sponsor, Sen. Andy Kim, was similarly determined to see the issue through Congress: "Corruption and exploitation are thriving right now within the gaps and loopholes of prediction markets. This manipulation leaves the select few winning big, at the expense of working Americans.

By instating basic guardrails and safeguards through this legislation, we can better protect consumers and safeguard against real threats to our national security coming out of this unregulated industry."

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