Prediction Markets Security and Integrity Act of 2026
- Sponsor
- Sen. Blumenthal, Richard [D-CT]
- Committees
- Judiciary Committee (primary)
- Last action
- Mar 11, 2026
Bottom line
The bill redefines online prediction markets as gambling, shifting primary regulatory authority to states under federal guidelines while imposing strict consumer protection and fraud prevention standards.
What it actually does
This bill establishes a federal framework for regulating online prediction markets, reclassifying them as gambling services subject to state oversight. It mandates that states wishing to allow such markets must develop and gain federal approval for a 'State wagering program' that includes stringent consumer protections, fraud prevention measures, and age restrictions. The bill also creates a national self-exclusion list and imposes federal penalties for violations.
Proponents argue
Supporters argue that online prediction markets are functionally equivalent to gambling and have operated without adequate oversight, leading to fraud, manipulation, and harm to consumers, particularly underage individuals and those with gambling disorders. They contend that this bill provides essential national safeguards, protects public health, and appropriately returns regulatory authority to states, which have historically regulated gambling.
Opponents contend
Critics may contend that online prediction markets are distinct from traditional gambling, serving as valuable tools for aggregating information and forecasting events, and that reclassifying them as gambling is an overreach that stifles innovation. They might argue that the proposed regulations are overly burdensome, could drive legitimate operators offshore, and limit consumer choice without clear evidence of widespread harm that existing laws cannot address.
The bill is moderately detailed, requiring careful reading to understand the extensive state program standards and definitions. An informed reader would need sufficient time to parse the regulatory requirements.
Section 4
Protecting Consumers from Fraud and Manipulation
This section prohibits insider trading and conflicts of interest in online prediction markets, bans manipulative and deceptive practices, and restricts fraudulent or harmful listings (e.g., those related to war, military action, or death). It requires operators to clearly state wager conditions and promptly remove violating listings. The Attorney General is tasked with issuing rules to implement these provisions, including defining 'material, nonpublic information'.
Supporters argue
Proponents argue these measures are crucial to ensure fair play, prevent market abuse, and protect the integrity of prediction markets, which they view as susceptible to the same vulnerabilities as other financial or gambling markets.
Critics contend
Opponents might argue that some restrictions, particularly on listing topics, could be overly broad and limit the utility of prediction markets for legitimate forecasting. They may also contend that existing fraud laws are sufficient.
Tradeoffs
The provision balances the desire to prevent fraud and protect consumers with concerns about potentially stifling market innovation or limiting the scope of events that can be predicted.
Section 6
State Wagering Program Application and Approval
This section outlines the process for states to apply to the Attorney General for approval to administer a 'State wagering program' for online prediction markets. States must submit a detailed description of their proposed program and an assurance of legal authority. The Attorney General has 180 days to approve or deny the application based on compliance with standards in Section 7. Approvals are valid for three years, with renewal and revocation procedures also defined.
Section 7(b)(2)
Permissible Wagering Restrictions
This provision sets strict limits on the types of wagers allowed under a State wagering program. It restricts wagering to individuals within the state (or compact states), prohibits proposition bets on amateur or intercollegiate sports, and bans wagers on sporting events once they have commenced. Crucially, it prohibits reload bonuses, tier programs, and VIP programs, which are common promotional tactics in online gambling.
Section 7(b)(6)(F)
Affordability Protections
This provision mandates that online prediction market operators implement affordability checks for high-volume bettors. Operators cannot accept more than 5 deposits in a 24-hour period or deposits made using a credit card. For wagers exceeding $1,000 in 24 hours or $10,000 in 30 days, operators must verify that the proposed deposit is not greater than 30% of the individual's monthly income or apply a 'reasonable lender standard' for an unsecured loan.
Section 7(b)(6)(G)
Artificial Intelligence Restriction
This provision prohibits online prediction market operators from using artificial intelligence to track individual wagers, create targeted offers or promotions, or develop new gambling products like proposition bets or microbets. This aims to prevent personalized, potentially addictive, or manipulative uses of AI.
Section 9
Preventing Minors from Gambling and Ensuring Compliance
This section explicitly prohibits individuals younger than 21 from registering or wagering on online prediction markets. It mandates that operators establish and maintain programs for age, identity, and location verification for all new and existing accounts. Operators must also ensure users are not restricted by sanctions or self-exclusion lists. Furthermore, it bans advertising to individuals under 21, including using branding that targets minors or placing ads in locations where underage users are prominent.
This provision amends the Commodity Exchange Act (CEA) to explicitly prohibit online prediction markets from listing 'event contracts' (agreements, contracts, transactions, or swaps in an excluded commodity based upon an occurrence, extent of an occurrence, or contingency). This effectively removes prediction markets from the regulatory purview of the Commodity Futures Trading Commission (CFTC) for these types of contracts and solidifies their classification as gambling.
Section 11(a)
Why it matters:This is standard legislative practice for amending existing law. However, its placement at the end of the bill, rather than near the core definitions, could lead to its impact being underestimated.
Case for: Supporters argue this amendment clarifies the regulatory landscape, ensuring that prediction markets are appropriately regulated as gambling by states under federal oversight, rather than being treated as financial instruments by the CFTC, which they contend is an inappropriate classification.
Case against: Critics might argue that this amendment fundamentally mischaracterizes prediction markets, which they see as distinct from gambling and potentially valuable for price discovery and information aggregation, thereby removing them from a potentially more suitable regulatory framework.
Estimated impact: This provision has a high impact, as it redefines the legal and regulatory classification of online prediction markets at the federal level, shifting them from potential CFTC oversight to a gambling-centric framework.
This section lists detailed criteria that would make a prospective online prediction market unsuitable for licensing by a State regulatory entity. These include failing to provide information, supplying misleading information, felony convictions, tax delinquency, and, significantly, any knowing participation in or association with illegal internet gambling activity since October 13, 2006. It also prohibits licensing if the applicant has received or provided assistance to entities accepting wagers in violation of federal or state law, or if they operate an offshore service that failed to prevent U.S. persons from placing illegal wagers.
Section 7(b)(8)(C)
Why it matters:The detailed nature of licensing suitability criteria is common in regulatory legislation. However, the retroactive lookback period and broad scope of 'illegal internet gambling activity' could be easily missed.
Case for: Proponents argue that these strict suitability standards are essential to ensure that only reputable and compliant operators enter the regulated market, preventing bad actors with a history of illegal activity from exploiting the new framework.
Case against: Critics might argue that the lookback period to 2006 and the broad definition of 'illegal internet gambling activity' could unfairly disqualify operators who may have operated in a legal gray area prior to clearer regulations, or who have since reformed their practices.
Estimated impact: This provision has a high impact on the competitive landscape of the online prediction market industry, potentially excluding many existing operators with a history of offering services in the U.S. prior to this bill's enactment.