A lot of money has been invested in the formation of the 119th United States Congress, and some of the newly elected and re-elected lawmakers may be very concerned about the legality and regulations of all these bets, even if the voting is over.

More than a dozen House Republicans wrote to the Commodity Futures Trading Committee this summer: Recommended rules for event contracts They were re-elected on November 5.

Also re-elected were Democratic Senators Elizabeth Warren of Massachusetts and Amy Klobuchar of Minnesota; They also wrote to the CFTC chairman this summer regarding event contracts. But in their case, the letters were supposed to express concerns about election betting.

Chances of a full sweep for Republicans are now up to 95% pic.twitter.com/X4YgfdyFwX

— Kalshi (@Kalshi) 6 November 2024

These re-elections, along with other interested parties joining the new Congress, could mean the CFTC’s next steps in regulating election betting are being closely watched.

The CFTC has been fighting in court to ban Kalshi and others from offering election-related event contracts, but has so far lost.

This legal guarantee allowed prediction markets to take large numbers of bets on the November 5 elections. For example, Kalshi’s “Who Will Win the Presidential Election?” Transaction volume of his work named. The market was at about $460 million as of Thursday afternoon.

But the CFTC also proposed a rule in May that would ban election-related contracts on regulated exchanges.

It was that suggestion that prompted letters to the regulator from some GOP House members, including South Dakota Rep. Dusty Johnson and Arkansas Rep. French Hill.

Lawmakers, most of whom were re-elected, warned, among other things, that the CFTC’s proposal was a “reinterpretation of long-standing legal text” that could have a “broad impact” on the derivatives industry.

“The proposal comes at a time when there has been a significant increase in new event contract product offerings, many of which may be affected by the proposed rule,” the 16 representatives wrote in a July 3 letter to CFTC Chairman Rostin Behnam. “On issues of complexity and consequences, such as this proposed rule, the Commission should benefit from a robust public debate and a diverse and complete record.”

The CFTC has not yet obligated these members of the House, but has extended the public comment period for notice of proposed rulemaking until August 8. The regulator has not yet finalized the proposed rule either.

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Again, Given the boom in election betting this fallIt seems possible that the issue will spark some debate among lawmakers and regulators before voters return to the polls. already exists US election odds We are ready for the 2028 presidential race.

Moreover, the re-election of most of the parties involved may mean that they will remain anxious and concerned when the new Congress is sworn in next year.

“Betting on election results could encourage individuals with financial or political interests to interfere in elections and pose a risk to public confidence in our democracy,” Klobuchar wrote in her July letter to the CFTC.

Among those returning to Washington are Democratic Senators Jeff Merkley, Richard Blumenthal, Chris Van Hollen and Sheldon Whitehouse. So do Democratic Reps. Eleanor Holmes Norton and Jamie Raskin.

Lawmakers alongside Warren also gave a speech in the summer urging Behnam to finalize the rule and ban political betting markets, which they fear could “impact and interfere with” democracy.

“Political betting changes the motivation behind every vote, causing financial calculations to replace political convictions,” the lawmakers wrote in a letter. “Allowing billionaires to place extraordinary bets and also contribute to a particular candidate or party, and allowing political insiders to bet on elections using non-public information, will further diminish public confidence in the electoral process.”

Not everyone agrees

But Democrats aren’t the only ones with ideas about election betting. All three Republican senators wrote a letter to Behnam expressing concern that the regulator was potentially limiting “the use of a critical investment vehicle.”

“Elections have tangible impacts on markets and the businesses of derivatives market users, and political activity contracts can serve as a valuable tool to hedge against these risks,” wrote Chuck Grassley of Iowa, Roger Marshall of Kansas, and Cindy Hyde-Smith of Mississippi. . May 10 letter: “These markets also provide valuable data on trends in voting public sentiment, which has legitimate public and academic benefit. Needs for similar risk management products have been expressed, and your rulemaking would apparently also bias the viability of these products.”

Like their GOP counterparts in the House, three Republican senators asked the CFTC to consider holding a public hearing on its proposal, noting ongoing litigation the regulator could impact.

The senators added that American investors “have demonstrated a clear desire to participate in these markets” (which has been amply demonstrated in the election) and that it is preferable for them to do so using platforms under US supervision.

“By banning the use of these markets in the United States, the CFTC will only serve to entice American investors to participate in offshore markets that they are left with inadequate safeguards,” they warned.

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