U.S. lawmakers urge U.S. Commodity Futures Trading Commission (CFTC) to ban polymarket platforms from 2024 election betting

Five U.S. Senators and three House representatives have urged the Commodity Futures Trading Commission (CFTC) to ban betting on the 2024 presidential election. The bipartisan group includes Senators Jeff Merkley, Richard Blumenthal, Elizabeth Warren, and Representatives Jamie Raskin and John Sarbanes.

Betting markets could influence election results

The legislators warn that allowing betting on elections could undermine the democratic process. They fear that wealthy individuals might use large wagers to influence outcomes, damaging public trust.

Commodification of Elections

The group argues that political bets can shift voters' motivations from political convictions to financial gain. This commodification, they contend, threatens the core principles of democracy. Platforms like Polymarket, where millions have been wagered, highlight the issue's urgency, especially given its history of regulatory infractions.

Polymarket's Popularity

Polymarket, a decentralized prediction market, has seen a surge in activity, particularly regarding the upcoming election. It uses USDC stablecoin, allowing users to buy and sell shares based on future event outcomes. In July, the platform recorded $1 billion in monthly trading volume, a significant rise from previous months.

Despite the impressive trading volumes, Polymarket has struggled financially. It has raised $70 million across two funding rounds, with notable investors including Ethereum co-founder Vitalik Buterin. To broaden its appeal, Polymarket partnered with MoonPay to facilitate debit and credit card payments.

A Divisive View on Prediction Markets

Yuga Cohler, an engineering lead at Coinbase, recently stated that "prediction markets are the purest technological manifestation of liberal democracy."

“They take free markets and free speech as inputs and output truth. In an age when centralized control of information is a systemic risk, prediction markets offer a way of cutting through misleading narratives and viewing the unvarnished truth.”