Reining in Out-Of-Control Prediction Markets

Floor Speech

BREAK IN TRANSCRIPT

Mr. MOORE of Utah.

BREAK IN TRANSCRIPT

Mr. MOORE of Utah. Mr. Speaker, I am glad to be joined by my colleague this evening. Before I provide my remarks, I yield such time as he may consume to the gentleman from Florida (Mr. Haridopolos). Honoring Captain Ted Kimmey, Veteran of the Month

BREAK IN TRANSCRIPT

Mr. MOORE of Utah. Mr. Speaker, I thank the gentleman from Florida. He has a clear passion for his State and the ways that he is going to support it.

I have taken my young son to Cape Canaveral before, and after going on a cruise, which we were fortunate to go on, we literally went to the cape. I think, even after the cruise, Cape Canaveral that afternoon was one of the most fascinating experiences for him, a unique place.

Utah's First District is actually a leader in space as well, with Thiokol of olden days, now Northrop Grumman. We do a lot of amazing work with--I think it is Houston, areas in Florida, Utah, and Huntsville, Alabama, that are big on this.

Mr. Speaker, again, I thank him for his support and great work.

Mr. Speaker, I thank you today for this time to be able to talk a little bit about a really important piece of legislation that I have put forward. It is a proposal for a solution to what I think many have considered out-of-control prediction markets.

Just hours before the United States military strikes in Iran, more than 150 accounts made investments of over $1,000 in event contracts based on the timing of the strikes, with six traders together making over $1.2 million.

In traditional betting, an individual places a wager on an outcome with odds set by a bookmaker that determines the winnings. In a prediction market, a trader buys shares in an outcome of an event. There are no odds, and share prices fluctuate based on market responses, allowing investors to turn a profit if they sell high or if their chosen outcome proves correct.

Our classified military strikes should not provide an opportunity for bettors to play or profit. Underregulated prediction markets have exposed America to needless public safety and national security risks by allowing traders to invest in outcomes related to sensitive matters like terrorism, assassination, war, or elections.

This nonpartisan issue has spiraled out of control, and Congress needs to pass legislation to require enforcement.

Congress previously included a subtle provision in the Commodity Exchange Act that preempts State regulation on betting when it is offered through event contracts. This loophole has opened a door to gambling on anything from Taylor Swift's appearance at a Kansas City Chiefs game to when the United States might launch a strike on Cuba.

Sports betting is illegal in 19 States, but prediction markets, like Kalshi or Polymarket, avoid State regulation through this loophole. Rather than offering betting services, they sell event contracts, a legacy financial instrument with payouts based on the outcomes of real-world events.

Again, this is a loophole for a legitimate financial tool that has existed for decades, maybe even centuries, but they are using this as a loophole to allow for betting in all States.

In January, one investor netted over $400,000 on Nicolas Maduro's fall from power, making the timely purchase just before President Trump announced the deposed leader's capture. Prediction market Kalshi claims that, legally, this is investing, not gambling.

I introduced H.R. 7840, the bipartisan Event Contract Enforcement Act, to address these concerns and put an end to reckless event-based gambling. This bill strengthens existing law, requiring the CFTC to prohibit event contracts related to terrorism, assassination, war, gaming, or criminal behavior.

The bill also bans trading on election outcomes and government activities to protect our elections from manipulation and insulate the government from insider trading opportunities.

This nonpartisan issue ensures event contracts can continue to serve in legitimate business interests while also protecting Americans from risk. I am looking forward to moving it through the legislative process.

BREAK IN TRANSCRIPT

Source