WASHINGTON, D.C. — A bipartisan group of U.S. senators is proposing new federal rules for prediction markets, aiming to curb insider advantages and strengthen consumer protections as participation in these platforms expands.
What This Means for You
- New safeguards could limit insider trading and conflicts of interest
- Platforms may face stricter rules on disclosures and customer protections
- Federal oversight of these markets could increase
Sen. Dave McCormick, R-Pennsylvania, and Sen. Kirsten Gillibrand, D-New York, on Thursday introduced the Prediction Market Act of 2026, which would create a regulatory framework for platforms where users trade on the outcomes of real-world events.
Prediction markets allow participants to buy and sell contracts tied to future outcomes — such as elections, economic trends, or weather events — using market prices to reflect the likelihood of those outcomes.
What the Bill Would Do
The legislation outlines a series of new requirements for companies offering prediction market products.
Key provisions include:
- Defining what qualifies as an “event contract,” a financial agreement tied to a future event
- Requiring federal review of certain contracts, particularly those involving sensitive topics such as violence
- Mandating clearer disclosures to ensure information is understandable for individual investors
- Requiring safeguards such as identity verification — often referred to as “Know Your Customer” standards — and separation of customer funds from company accounts
The bill would also prohibit members of Congress and senior government officials from owning event contracts, addressing concerns about conflicts of interest.
Expanded Federal Oversight
The proposal would expand the role of the Commodity Futures Trading Commission, the federal agency that regulates derivatives markets.
It would create a new Office of the Retail Advocate within the agency to represent individual investors, along with advisory groups focused on consumer protection and financial innovation.
The legislation also directs the agency to study emerging trends in prediction markets and report findings to Congress.
“Prediction markets are already changing how Americans understand and manage risk,” McCormick said.
Gillibrand said the bill is intended to prevent insider advantages and ensure fairness.
“Americans deserve financial markets that are fair, transparent, and not tilted in favor of those with privileged access,” she said.
Why Lawmakers Say It’s Needed
Prediction markets are already subject to federal rules designed to prevent fraud and manipulation.
However, lawmakers said the rapid growth of retail participation — meaning everyday individuals, not large institutional investors — has created gaps in oversight.
Supporters argue that clearer rules could help protect consumers while allowing the industry to develop within the United States rather than move overseas.
What Comes Next
The bill has been introduced in the Senate and will need approval from both chambers of Congress before it can become law.
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