Biden Administration’s Order To Ban Election Betting Markets Draws Criticism

The Biden administration has issued a directive to ban betting markets on the 2024 elections, a move that has stirred controversy and raised concerns about its potential implications.

The decision, spearheaded by the Commodity Futures Trading Commission (CFTC), proposes a permanent prohibition on betting on election commercial prediction markets in the United States. The move comes at a time when sports gambling has experienced deregulation and increased popularity, prompting questions about the administration’s motivations.

Rostin Behnam, chairman of the CFTC, acknowledged the social utility of such markets but emphasized the need for immediate regulation due to the exponential growth in the number of contracts listed on commercial exchanges. Behnam cited concerns about potential election fraud allegations impacting market prices, highlighting the need to safeguard election integrity and the democratic process.

Critics of the ban argue that election betting markets provide valuable insights distinct from traditional polling methods employed by mainstream media outlets. These markets serve as valuable resources for academics and journalists seeking alternative perspectives on electoral dynamics.

The proposed rule would not only prohibit betting on national elections but also extend to prediction markets on less weighty subjects, including awards ceremonies and sports events. This broad restriction has raised eyebrows among proponents of free market principles, who question the necessity of such stringent regulations.

Among the platforms affected by the ban are Kalshi, Polymarket, and PredictIt, each offering election markets catering to different segments of users. PredictIt, associated with Victoria University of Wellington and operated by an American political consulting firm named Aristotle, has faced legal challenges in the past but continues to operate under a court injunction.

Polymarket, an onshore platform with a strong forecasting record, has also come under scrutiny, despite its compliance with regulations. Similarly, Kalshi, a commercial U.S. financial exchange, has faced obstacles in operating political markets, with the CFTC denying its application for congressional election markets in September.

While Behnam asserts that the goal of the ban is to protect democracy and uphold regulatory standards, critics remain skeptical, viewing it as an encroachment on individual freedoms and a departure from established regulatory norms.