Oregon Senator Jeff Merkley and Minnesota Senator Amy Klobuchar have introduced the End Prediction Market Corruption Act, which aims to “crack down” on potential insider trading efforts in event contract wagering.
The End Prediction Market Corruption Act would prohibit US government officials such as the President, Vice President and members of Congress from trading event contracts. Any violations of the legislation would result in civic penalties of $10,000, administered by the US Attorney General.
Merkley addressed his new legislation, having said, “When public officials use non-public information to win a bet, you have the perfect recipe to undermine the public’s belief that government officials are working for the public good, not for their own personal profits.
“Perfectly timed bets on prediction markets have the unmistakable stench of corruption. To protect the public interest, Congress must step up and pass my End Prediction Market Corruption Act to crack down on this bad bet for democracy.”
Merkley and Klobuchar’s release states the bill would “ensure that federal elected officials maintain their oath of office to serve the people by preventing them from trading on information that they gained through their role.”
The End Prediction Market Corruption Act was introduced following “multiple public reports” regarding potential corruption with prediction markets, as well as the offering’s “growing influence” in the US.
The legislation has garnered support from organizations such as Public Citizen, Citizens for Responsibility and Ethics in Washington and the Project on Government Oversight (POGO).
“The American people deserve unwavering ethical standards from their government officials. Officials have a responsibility to avoid not only actual conflicts of interest but even the appearance of impropriety,” POGO Policy Associate Janice Luong said.
“POGO is pleased to endorse the End Prediction Market Corruption Act, which will further prohibit covered government officials from exploiting nonpublic information for personal gain in prediction markets.”
Just days prior to the legislation being introduced, a new coalition of consumer advocates, Gambling is Not Investing, launched to provide support for consistent consumer protections and regulatory accountability, naming former Congressman Mick Mulvaney as its Executive Director.
The coalition looks to enforce state and Tribal gaming laws against prediction market operators which facilitate unregulated sports betting through event contract trading.
Michigan AG Dana Nessel filed a civil enforcement action against Kalshi on March 4, leading to preemptive action from Polymarket which cited concerns of an ‘immediate and concrete’ threat following the lawsuit
