Federal lawmakers have introduced a significant number of bills related to prediction markets, indicating an increasing interest in this sector, though consensus on regulation remains elusive.
During the current congressional session, more than 25 prediction market bills have been proposed, yet there is still no agreement among lawmakers on how to regulate this burgeoning industry.
The proposed legislation varies widely, from outright bans on sports-event contracts to measures aimed at preventing insider trading, limiting trading by public officials, enhancing consumer protections, and establishing comprehensive federal regulatory frameworks.
Despite the large number of proposals, only one has progressed beyond its initial introduction. Recently, the House Appropriations Committee voted 5-4 to move forward with the Stop Lawmakers From Predicting Act.
While the sheer volume of legislation might suggest a growing momentum towards federal regulation, experts like Joshua Huder, a congressional scholar at Georgetown University, and gambling law authority I. Nelson Rose, argue that the situation is more nuanced.
Rather than indicating a unified approach to prediction market regulation, these bills highlight two concurrent trends: lawmakers are increasingly recognizing the need for congressional oversight of the expanding sector, yet they remain divided on how to classify and regulate prediction markets.
This legislative push coincides with a more proactive federal response. The Commodity Futures Trading Commission (CFTC) has initiated lawsuits against state efforts to limit federally regulated event contracts and is proposing rules to formally govern the industry.
Former President Donald Trump has also publicly supported prediction markets as “financial markets” that should fall under CFTC jurisdiction.
A common misunderstanding about Congress is that every bill introduced is meant to become law. Huder notes that lawmakers often propose legislation to showcase their priorities, address constituent concerns, or take a stance on emerging issues, even if they believe the bill is unlikely to progress.
Prediction markets have emerged as a focal point for such legislative activity. Rose points out that lawmakers are reacting to the increasing public interest in the industry, suggesting that “politicians can gauge public sentiment” as more states consider whether to ban, tax, or regulate sports-event contracts.
Huder emphasized in an email to Gambling Insider that the aim of passing legislation is not always the primary focus. “They introduce bills to represent their constituents and/or priorities,” he stated.
Introducing a bill is merely one step in the legislative process. Huder explains that committees, along with the lawmakers and staff responsible for specific policy areas, play a crucial role in determining which proposals advance through Congress.
This helps clarify why numerous prediction market bills can coexist, even if many tackle similar issues. While individual lawmakers may continue to propose new ideas, it is ultimately the committees that decide which ones warrant serious consideration.
Co-sponsor counts are often seen as indicators of a bill's momentum. However, Huder advises careful interpretation of these numbers. A bill with over 300 co-sponsors signifies a strong policy idea, as it reflects the backing of a majority in the chamber and bipartisan support.
Nevertheless, a lower number of co-sponsors does not necessarily mean the legislation is weak, particularly if those sponsors include the committee chair and ranking members.