U.S. Rep. Blake Moore (R-UT) sponsored the Event Contract Enforcement Act on March 5, bipartisan legislation that would strengthen the Commodity Futures Trading Commission’s (CFTC) authority to prohibit event contracts that pose national security, public safety, or insider trading risks.
Rep. Moore introduced the bill, H.R. 7840, alongside U.S. Rep. Salud Carbajal (D-CA). The legislation would require the CFTC to prohibit event contracts related to terrorism, assassination, war, gaming, or illegal activity and would add new prohibitions on contracts tied to election outcomes or government activity. It would also create a pathway for states to opt out of the gaming contract prohibition, allowing them to decide independently whether to permit sports-related contracts within their borders.
“Under-regulated prediction markets have exposed America to needless public safety and national security risks by allowing traders to invest in outcomes related to sensitive matters like terrorism, assassination, war, or elections,” Rep. Moore said. “Prediction markets also sponsor sports-related contracts against the wishes of many states, including Utah, that would otherwise prohibit these contracts if offered as traditional sports betting.”
Contracts tied to illegal activity create incentives for criminals to commit crimes in order to trigger payouts, Rep. Moore’s office explained, while contracts related to government or military activity can incentivize insiders to leak sensitive information for financial gain.
Under current law, the CFTC has discretion to prohibit such event contracts but is not required to act. The Event Contract Enforcement Act would make that enforcement mandatory.
Rep. Carbajal said H.R. 7840 would protect consumers. “Under-regulated prediction markets are creating an environment ripe for insider trading,” he said. “The monetization of military activities or election processes threatens our national security and further erodes public trust in government.”