Facial Recognition to Protect Children Act
- Sponsor
- Rep. Gottheimer, Josh [D-NJ-5]
- Committees
- Energy and Commerce Committee (primary)
- Last action
- Jul 15, 2026
Bottom line
The bill aims to protect minors from online gambling and prediction markets while also expanding the CFTC's regulatory oversight and consumer protection mechanisms for event contracts.
What it actually does
This bill mandates that online wagering and prediction market platforms use facial recognition technology to verify users are over 18 years old, with strict data minimization rules. Additionally, it significantly amends the Commodity Exchange Act to grant the Commodity Futures Trading Commission (CFTC) enhanced powers to regulate "event contracts," including prohibiting those deemed contrary to public interest, strengthening consumer protection measures, and establishing new advisory and advocacy offices within the CFTC.
Proponents argue
Supporters argue this bill is crucial for protecting children from the harms of online gambling and speculative prediction markets by implementing robust age verification. They also contend that the enhanced regulatory framework for event contracts will safeguard retail investors from deceptive practices and ensure market integrity, especially given the increasing accessibility of these platforms.
Opponents contend
Opponents may raise concerns about privacy implications of mandatory facial recognition technology, potential for data breaches, and the burden on platform operators. Critics of the event contract provisions might argue that the CFTC's expanded authority could stifle innovation in financial markets or that the criteria for deeming contracts "contrary to public interest" are overly broad or subjective.
The bill is moderately complex due to its dual focus and detailed amendments to existing law, requiring careful reading beyond a quick scan to grasp its full implications.
Section 2(a)
Age Verification for Wagering and Prediction Market Platforms
This provision requires all online wagering and prediction market platforms to use commercially available facial recognition technology to confirm that users are over 18 years old before allowing them to access the platform or place wagers/orders. It also includes strict rules for data minimization, requiring platforms to collect only data "reasonably necessary" for age verification and to delete any unnecessary "covered data" (biometric data that identifies or is linkable to a user).
Supporters argue
Supporters argue this is a necessary step to protect children from the addictive and financial harms associated with online gambling and speculative markets, ensuring platforms cannot easily be accessed by underage individuals.
Critics contend
Critics may argue that mandatory facial recognition poses significant privacy risks for all users, regardless of age, and could lead to data breaches or misuse of sensitive biometric information. They might also question the effectiveness and accuracy of such technology across diverse populations.
Tradeoffs
Balances child protection with individual privacy concerns and the operational burden on businesses.
Section 2(b)
Federal Trade Commission Enforcement
This section designates any violation of the age verification requirements as an unfair or deceptive act or practice under the Federal Trade Commission Act. It grants the FTC full authority to enforce these provisions, including the power to promulgate necessary regulations, subjecting violators to the penalties and privileges outlined in the FTC Act.
Section 2(c), amending 7 U.S.C. 7a-2 by inserting new subsection (d)(2)
CFTC Review and Prohibition of Certain Event Contracts
This provision grants the Commodity Futures Trading Commission (CFTC) the authority to review and prohibit "event contracts" (contracts based on occurrences or contingencies) if they are determined to be "contrary to the public interest." This includes contracts based on unlawful activity, terrorism, assassination, war, violence, or gaming. The CFTC is required to define criteria for this determination, specifically noting that contracts materially encouraging violence or unlawful activity are likely contrary to public interest.
Section 2(c), amending 7 U.S.C. 7a-2 by inserting new subsection (d)(2)(D)
Standardized Certification and Retail Customer Disclosure for Event Contracts
This section mandates that the CFTC prescribe standardized requirements for the format of written certifications submitted by designated contract markets and swap execution facilities for new event contracts. It also requires the CFTC to establish disclosure requirements for the material terms and conditions of event contracts, specifically designed to promote readability for retail customers. Financial penalties for non-compliance with certification format rules are also authorized.
Section 2(c), amending 7 U.S.C. 7a-2 by inserting new subsection (d)(3), (4), (5)
Enhanced Consumer Protections for Event Contracts
This provision introduces several consumer protection measures for event contracts offered to non-eligible contract participants. It prohibits deceptive or misleading promotional materials, requires derivatives clearing organizations to implement Anti-Money Laundering (AML) compliance programs (including age verification for individual customers), and mandates segregation of member funds, clear risk disclosures to customers, and separate treatment of funds for different contract types.
Section 2(c), amending 7 U.S.C. 7a-2 by inserting new subsection (d)(6)
Establishment of Advisory Council on Consumer Protection
This section establishes a 15-member Advisory Council on Consumer Protection within the CFTC, to be created within 90 days of enactment. Its mission is to provide a forum for communication and analysis on retail investor participation in derivatives markets, encourage discussions on consumer protection for event contracts, and develop recommendations. The council will include state attorneys general, subject matter experts, and representatives from various government and market entities, and will report to Congress twice a year.
Section 2(c), amending 7 U.S.C. 7a-2 by inserting new subsection (d)(7)
Establishment of Office of the Retail Advocate
This section establishes an Office of the Retail Advocate within the CFTC, led by a Retail Advocate who reports directly to the Commission. The Retail Advocate's functions include assisting retail participants with problems, analyzing the impact of proposed regulations on them, proposing regulatory changes, conducting research, and operating an Ombudsman. The office is granted access to Commission documents (with confidentiality safeguards) and must submit annual reports to Congress.
Requires wagering and prediction market operators to collect, process, or transfer user biometric data only as "reasonably necessary, proportionate, and limited" for age verification, and to delete any data determined not necessary for compliance.
Section 2(a)(2)
Why it matters:Standard legislative practice to include limitations or safeguards within the operational details of a new requirement.
Case for: Proponents argue this is a crucial privacy safeguard, preventing platforms from over-collecting or indefinitely retaining sensitive biometric data, thereby mitigating risks of misuse or breaches.
Case against: Critics might argue that the terms "reasonably necessary, proportionate, and limited" are vague and could lead to inconsistent interpretation and enforcement, potentially undermining the intended privacy protections.
Estimated impact: Significant impact on data handling practices for affected platforms, potentially reducing the overall privacy risk for users.
Defines "covered data" as biometric data that identifies a user or is "reasonably linkable" to the identity of a user. This definition is critical for understanding the scope of the data minimization and deletion requirements.
Section 2(d)(2)
Why it matters:Standard legislative practice to consolidate definitions at the end of a bill.
Case for: Proponents argue that a clear definition of "covered data" is essential for platforms to understand their obligations and for regulators to enforce the data minimization requirements effectively.
Case against: Some might argue that "reasonably linkable" could still be interpreted broadly, potentially encompassing more data than intended or creating ambiguity for compliance.
Estimated impact: Directly shapes the scope of privacy protections for biometric data collected under the bill.