STOP Corrupt Bets Act of 2026
- Sponsor
- Rep. Raskin, Jamie [D-MD-8]
- Committees
- Agriculture Committee (primary)
- Last action
- Mar 26, 2026
Bottom line
The STOP Corrupt Bets Act aims to prevent what it characterizes as gambling on political, governmental, sporting, and military events by explicitly banning such prediction market contracts, while also calling for further study on the broader prediction market landscape.
What it actually does
This bill amends the Commodity Exchange Act to explicitly prohibit the trading of certain event contracts on prediction markets through registered entities. Specifically, it bans contracts related to political elections, actions by U.S. government branches (with a hedging exception), sporting events, and military actions. It also mandates a Government Accountability Office (GAO) study on prediction markets, including issues like insider trading and impacts on young adults, and calls for recommendations to Congress.
Proponents argue
Proponents argue that allowing prediction markets on sensitive events like elections, legislative actions, or military operations undermines the integrity of these processes and can be exploited for illicit activities like insider trading or market manipulation. They contend that such markets are essentially unregulated gambling and pose risks to consumers, particularly young adults, and that the Commodity Futures Trading Commission (CFTC) should not permit a regulatory structure that facilitates these activities. The bill clarifies existing intent and closes potential loopholes.
Opponents contend
Opponents of such prohibitions, typically operators and participants in prediction markets, argue that these markets serve as valuable tools for aggregating information and forecasting outcomes, often more accurately than traditional polls or expert opinions. They contend that banning these markets stifles innovation, limits free speech, and removes a potentially useful mechanism for risk management or hedging against specific event outcomes. They might also argue that existing regulatory frameworks are sufficient or could be adapted, rather than imposing outright bans.
The bill is very short and straightforward, making it highly accessible for any reader to understand its core provisions quickly.
Section 2. Prohibition on Certain Event Contracts, amending 7 U.S.C. 7a-2(c)(5)
Explicit Ban on Event Contracts for Political, Governmental, Sporting, and Military Outcomes
This provision directly amends the Commodity Exchange Act to make it illegal for any registered entity (like a futures exchange) to list or allow trading of contracts, transactions, or swaps that involve political elections, actions by any branch of the U.S. government (unless for commercial hedging), sporting events, or military actions by any country. This aims to prevent prediction markets from operating on these specific types of events.
Supporters argue
Supporters argue this ban is crucial for protecting the integrity of democratic processes, sporting events, and national security decisions from being commoditized and potentially manipulated. They believe these markets are akin to gambling and can lead to perverse incentives or insider trading, especially concerning governmental actions. The hedging exception ensures legitimate commercial risk management is still possible.
Critics contend
Critics contend that these markets provide valuable, real-time information and forecasting capabilities that can be more accurate than traditional methods. They argue that a blanket ban stifles innovation, limits economic freedom, and removes a tool that could potentially be used for legitimate risk assessment or even for identifying potential issues (e.g., through unusual trading patterns). They may also argue that the hedging exception is too narrow or difficult to implement.
Tradeoffs
The provision balances the perceived integrity of public institutions and events against the potential for innovative information aggregation and risk management tools offered by prediction markets. It also navigates the line between legitimate financial instruments and what some consider gambling.
Section 3. Sense of Congress
Clarification of Congressional Intent and Non-Preemption of State Gambling Laws
This section declares that Congress's original intent in the Commodity Exchange Act was to prohibit the type of conduct banned by this bill. It also states that the CFTC should prohibit any agreement, contract, transaction, or swap not used for hedging commercial risk, to prevent a federal regulatory structure that permits gambling. Furthermore, it explicitly states that this Act does not override any state laws that regulate or prohibit gambling.
Section 4. GAO Study
Mandatory Government Accountability Office Study on Prediction Markets
This provision requires the Comptroller General of the United States (who heads the GAO) to conduct a study within 60 days of the bill's enactment. The study must examine various aspects of prediction markets, including insider trading, their impact on young adults (18-20 years old), other types of prediction markets not covered by the new prohibition, and ways to address illegal activities in both domestic and foreign prediction markets. The GAO must then submit a public report with recommendations to Congress.
The prohibition on contracts related to actions taken by the executive, legislative, or judicial branch of the United States does not apply if the contract is used for hedging or mitigating commercial risk, as determined by the Commission.
Section 2(D)(iii) of the Commodity Exchange Act (7 U.S.C. 7a-2(c)(5))
Why it matters:This is standard legislative practice to include specific carve-outs or exceptions within broader prohibitions to avoid unintended consequences for legitimate activities. It ensures that the ban doesn't inadvertently prevent businesses from managing genuine commercial risks related to government policy.
Case for: Proponents argue that this exception is vital for allowing legitimate businesses to manage risks associated with government actions (e.g., policy changes, regulatory decisions) without being caught by the broader ban. It demonstrates a thoughtful approach to distinguishing between speculative gambling and essential risk management.
Case against: Critics might argue that the definition of 'hedging or mitigating commercial risk' can be ambiguous and difficult for the CFTC to enforce, potentially creating a loophole for sophisticated actors to engage in prohibited activities under the guise of hedging. The discretion given to the Commission could lead to inconsistent application.
Estimated impact: This exception prevents the prohibition from impacting a potentially significant, though currently undefined, segment of commercial risk management activities that might involve governmental outcomes. Its impact depends heavily on how the CFTC defines and regulates 'hedging' in this context.