Representative Don Davis (D-NC) has introduced the "No Betting on Your Own Race Act," a bill that would amend federal election law to prohibit candidates for federal office, their spouses, dependent children, and authorized campaign committees from trading prediction market contracts related to their own elections. The prohibition covers contracts settling on election outcomes, vote shares, margins, placement, or whether a person remains a candidate. Violations would result in a civil fine of $10,000 per instance or three times the net financial gain, whichever is greater.
The legislation also addresses indirect exposure, banning the inducement of others to trade, holding beneficial interests, or funding positions with knowledge of their purpose. To facilitate enforcement, the Federal Election Commission would be required to publish a free, machine-readable list of all federal candidates updated at least weekly. Platforms and their staff would receive immunity from liability for acting in good faith to prevent breaches, including closing accounts, unwinding trades, or reporting suspected violations to the Commodity Futures Trading Commission, the attorney general, or the FEC without notifying the individual reported. A grace period allows for divestment if a position becomes covered upon a candidacy declaration.
This legislative move signals a shift from voluntary platform policing to statutory regulation of political prediction markets. By explicitly defining prohibited conduct and mandating FEC data publication, the bill aims to close loopholes where candidates might exploit insider knowledge of their own campaigns. The inclusion of broad definitions covering not just winners but also vote share and candidacy status reflects an effort to address sophisticated manipulation tactics rather than simple betting. Granting exchanges immunity for proactive enforcement encourages compliance without fear of legal retaliation, potentially accelerating the adoption of automated screening tools across the industry.
The proposal highlights growing regulatory concern over the integrity of emerging asset classes intersecting with democratic processes. While exchanges like Kalshi have previously fined candidates, the lack of uniform federal standards creates inconsistent enforcement landscapes. This bill seeks to standardize penalties and reporting mechanisms, aligning political event contracts with existing securities regulations regarding insider trading. However, the effectiveness will depend on the CFTC’s ability to designate additional political events under its rulemaking authority and the practical feasibility of real-time monitoring by platforms against the newly mandated FEC database.
