Some Democratic MPs serving in the US House of Representatives called for intervention by the Commodity Futures Trading Commission (CFTC) due to the trading opportunities opened to users of various prediction markets on sensitive issues such as military operations. Especially after the contracts regarding the rescue of American pilots serving in Iran came into circulation, the need for more inspection of such platforms was brought to the agenda.
Reaction from US MPs to prediction markets
A group of Democrats led by Representatives Seth Moulton and Jim McGovern delivered a letter to CFTC Chairman Michael Selig. The letter asked about measures that could be taken to prevent prediction market platforms operating abroad from allowing transactions that are not permitted in the USA.
In his statement evaluating these transactions, Jim McGovern harshly criticized the turning of events such as war into a betting opportunity and expressed his discomfort with the perception that human life is just a number on a screen.
Prediction markets such as Polymarket and Kalshi have gained serious popularity recently, especially during the US presidential election period. On these platforms, users can take action not only on topics such as politics or sports, but also on important events taking place in the real world.
In the past, some politicians have pointed out that transactions based on insider information can be made on such platforms and criticized, for example, the presence in the market of prediction contracts regarding the capture of Venezuelan President Nicolás Maduro.
CFTC’s role and platforms’ response
Last week, Seth Moulton specifically reacted to the predictions on the Polymarket platform about the time when the American pilots who crashed in Iran would be rescued. The platform announced that these transactions were removed and an internal evaluation of the process was initiated.
In its statement, Polymarket stated that the relevant contract should not be published and shared that the internal investigation on the issue is continuing.
The CFTC has declared that it has sole authority over the prediction markets and is working on new regulations as the industry grows. The institution’s current rules do not allow the approval of contracts covering topics such as terrorism, assassination and war.
In their letter to the CFTC, Democratic deputies expressed the view that contracts that are considered contrary to US law are becoming increasingly common. Although it was pointed out that many transactions took place on platforms outside the USA, it was emphasized that the institution should effectively impose sanctions. In addition, answers were requested to questions regarding transactions made by leaking inside information and contracts outside the legal scope.
There was no immediate statement from the CFTC on the issue. It is anticipated that the issue may be reflected in regulatory processes in the coming period.
