Key facts
- Rep. Don Davis (D-NC) introduced the No Betting on Your Own Race Act.
- The bill bars federal candidates, spouses, and committees from trading prediction market contracts on their own elections.
- Violations would result in a $10,000 fine or three times the gain, whichever is greater.
- Platforms would be immune for good-faith actions to stop breaches, including account closures and trade unwinding.
- The Federal Election Commission would publish a list of federal candidates to aid screening.
- The ban applies to contracts settling on election outcomes, candidacy status, vote share, and margin.
Representative Don Davis (D-NC) has introduced a bill in the House aimed at preventing federal candidates from profiting from non-public information about their own elections. The proposed legislation, known as the No Betting on Your Own Race Act, would prohibit candidates, their spouses, and campaign committees from trading prediction market contracts that settle based on election outcomes, candidacy status, vote share, or margin.
The bill seeks to establish a clear prohibition, treating candidates similarly to athletes who are barred from betting on their own games. Davis stated on social media that candidates from different parties have engaged in such trading, and Congress must put an end to it.
Violations of the proposed act would be considered a civil offense, carrying a penalty of $10,000 per violation or three times the net financial gain derived from the trade, whichever amount is larger. The legislation also includes provisions for indirect exposure, such as encouraging or funding another person's trade on their own election.
Significant portions of the bill focus on the responsibilities and protections for trading platforms. These platforms and their staff would be shielded from penalties if they act in good faith to prevent breaches, which could include restricting or closing accounts and unwinding trades. They would also be able to report suspected violations to regulatory bodies like the Commodity Futures Trading Commission (CFTC), the attorney general, or the Federal Election Commission (FEC) without incurring liability.
To facilitate enforcement, the FEC would be required to maintain and publish a free, machine-readable list of all federal candidates, updated at least weekly. This list would include each person's name, commission identifier, office sought, and the dates of their candidacy. Candidates would also be notified of the rules when they file their candidacy.
The bill allows for a grace period, exempting positions held or sold when a candidate declares their candidacy, provided they are divested within the platform's minimum divestment window. The definition of a political event contract is broad, encompassing not only races but also caucuses, nominations, control of Congress, and other governmental events designated by the CFTC.
This legislative effort comes amid existing self-policing by exchanges and regulatory scrutiny. Kalshi, a prediction market platform, has previously fined congressional candidates for trading on their own races and has suspended candidates. The CFTC is also reportedly investigating former Representative Adam Kinzinger over trades related to his presidential pardon, and agency staff have cautioned exchanges about the potential for manipulation in contracts settling on the conduct of named individuals.