A newly introduced bipartisan bill seeks to prohibit event contracts associated with terrorism, assassination, war, gaming, and other illegal activities. The proposed federal legislation aims to address the loophole that has enabled prediction-trading platforms to operate ethically questionable markets, including sports contracts.
On March 6, Representatives Blake Moore (R-UT) and Salud Carbajal (D-CA) unveiled the Event Contract Enforcement Act (ECEA). This bill explicitly bans the trading of event contracts related to sports, terrorism, assassination, war, election outcomes, and illegal activities.
If enacted, the ECEA would empower the Commodity Futures Trading Commission (CFTC) to enforce this ban across all specified categories. The legislation would specifically prohibit event contracts based on terrorism, assassination, war, gaming, illegal activities, election outcomes, government actions, or any other activities deemed contrary to public interest by the CFTC.
However, states would retain the option to opt out of the prohibition on gaming contracts, allowing them to decide whether to permit sports-related contracts within their jurisdictions.
In their announcement, Reps. Moore and Carbajal emphasized that their bill is a crucial step in reinforcing existing laws to ensure that event contracts continue to meet legitimate business needs while safeguarding American citizens.
They pointed out that event contracts have long been used as financial instruments across various sectors, such as agriculture, to hedge against potential losses. Nevertheless, the recent emergence of prediction markets has raised concerns about exposing Americans to risks related to national security, public safety, and insider trading.
Moore highlighted that under-regulated prediction markets pose unnecessary risks by allowing trades on sensitive topics like terrorism, assassination, war, and elections. He noted that sports-related predictions often conflict with state laws, including those in his home state of Utah.
Carbajal also expressed his commitment to this bipartisan initiative, focusing on the dangers of insider trading that arise from poorly regulated markets. He stated that the commercialization of military actions or election processes jeopardizes national security and undermines public trust in government.
The Event Contract Enforcement Act represents a significant initial measure aimed at protecting consumers and maintaining ethical standards across governmental levels. Both representatives are dedicated to collaborating across party lines to advance this important issue.