Revitalizing Political Betting: Is it Making a Comeback? – POLITICO

**America’s Political Betting Markets Making a Comeback Despite Regulatory Concerns**
Morning Money, a free version of POLITICO Pro Financial Services morning newsletter, reports that political betting markets in the United States are mounting a comeback bid for 2024, despite concerns from Washington. PredictIt, a political markets operator that faced shutdown attempts from federal regulators, has launched new contracts that allow bets on the longshot presidential bids of Vivek Ramaswamy, Chris Christie, and Robert F. Kennedy Jr. Another startup, Kalshi, is also refusing to back down from offering wagers on congressional control. Despite facing regulatory resistance, these platforms are determined to continue operating.

**Regulatory Challenges Faced by Political Betting Markets**
The main regulatory challenge faced by political betting markets in the United States is from the Commodity Futures Trading Commission (CFTC), which regulates derivatives trading. The CFTC has long-running concerns that election-related betting may violate rules for the market. Last year, the agency tried to shut down PredictIt, citing disputes over its status as an academic venture. However, pending litigation has forced the CFTC to back off for now. Similarly, the CFTC has been considering whether to block Kalshi’s offerings due to questions about their legality. As a result, the CFTC has asked for a second round of public comment on Kalshi’s plans.

**Arguments for and against Political Betting**
Proponents of political betting, including economists like Jason Furman, argue that it provides a better gauge of voter sentiment than polling and serves as a hedging tool for election risk. However, investor advocates warn that it may lead to excessive gambling. CFTC Chair Rostin Behnam has expressed concerns that political betting could make the agency an “election cop.” The regulatory debate within the CFTC revolves around whether to give Kalshi the green light. The agency’s two Republican commissioners have dissented against the decision to prolong the answer to this question, arguing for more clarity.

**Continued Trading Despite Regulatory Uncertainty**
Despite the regulatory uncertainty surrounding political betting markets, traders like Caleb Davies have not stopped participating. Since PredictIt was ordered to close last summer, Davies has been trading on other platforms like the American Civics Exchange. Davies estimates that his total profits from prediction market trades since 2015 exceed $100,000. He currently has $24,000 riding on two bets: that Senator Dianne Feinstein will not retire before 2024 and that there will be no special election to replace Representative George Santos this year. If both bets pan out, Davies stands to make an additional $32,000.

**Other Market News**
In other market news, the Supreme Court’s recent ruling against affirmative action may have a chilling effect on corporate diversity, equity, and inclusion programs. Critics argue that this ruling will embolden groups opposed to such programs, making it more challenging for companies to implement them. The Supreme Court is also expected to rule on challenges to President Joe Biden’s push to forgive over $400 million in student loans. Furthermore, U.S. GDP rose by 2% in the first quarter, which is an upward revision from the previous estimate of 1.3%. Lastly, three individuals have been charged with insider trading for allegedly making over $22 million based on confidential information about former President Donald Trump’s media company going public.

**Republican Chairs Press SEC Chair on Transparency**
The Republican chairs of the House Financial Services, Judiciary, and Oversight Committees have sent a letter to SEC Chair Gary Gensler, raising concerns about federal record-keeping laws and the use of private email accounts for official business. The Republicans suggest that there may be some transparency disconnect and request certification from Gensler regarding the agency’s adherence to these laws. This is not the first time Gensler has faced scrutiny for his email use, as an investigation during his time as CFTC chair found that he repeatedly used his personal email for official communication.

In a regulatory landscape filled with uncertainty and debate, American political betting markets are determined to make a comeback for the 2024 elections. Despite facing challenges from the CFTC and concerns about excessive gambling, these platforms are persevering and even launching new contracts for longshot presidential bids. Traders continue to participate, hoping to profit from their predictions. As regulatory discussions continue, the future of political betting markets remains uncertain, but for now, they are forging ahead.

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