Rep. Ritchie Torres has called on the Commodity Futures Trading Commission (CFTC) to regulate election-related prediction markets instead of prohibiting them.
In a letter to CFTC Chairman Rostin Behnam, Torres urged the agency to focus on encouraging responsible innovation and working with platforms like Kalshi and Polymarket to ensure these markets are tightly regulated, rather than pushing traders onto unregulated, illegal platforms.
Torres’ letter follows a September 6 court ruling that partially overturned the CFTC’s efforts to block U.S.-based prediction platform Kalshi from offering election-related contracts. He stressed that further legal challenges could undermine election integrity and consumer protection, allowing illegal platforms to flourish.
Torres wrote:
“The CFTC has a mission to promote responsible innovation.”
He called on the agency to work with regulated stakeholders to ensure election-related contracts are conducted transparently and securely in regulated markets.
Polymarket declines amid uncertainties
Polymarket has seen a significant drop in activity in recent days due to regulatory pressure and growing uncertainty surrounding election betting.
According to Dune Analytics, Polymarket's daily trader count dropped by nearly 40%, from 12,595 on September 11 to 7,627 on September 15. The platform's total daily volume also dropped sharply, down 85.6%, from $37.2 million to $5.35 million over the same period.
The drop in activity follows a CFTC proposal to restrict certain event contracts, particularly those linked to political outcomes. The agency has expressed concerns about the potential for fraud in those markets, citing instances where fabricated information such as a fake poll about musician Kid Rock has distorted market values.
Despite facing numerous regulatory challenges, Polymarket has gained some mainstream recognition, with Bloomberg recently integrating the platform into its financial tools. The move shows that interest in decentralized prediction markets is growing, even as regulators increasingly clamp down.
The debate is getting more heated.
The debate over election prediction markets intensified on September 6 when a federal court ruled in favor of Kalshi, allowing the platform to offer election-related contracts. The platform called the decision a historic moment, claiming that for the first time in 100 years, Americans could legally trade on election results.
However, the CFTC quickly filed an emergency request to halt Kalshi’s election market operations, citing concerns about potential manipulation. The agency argued that election markets could undermine public confidence in the democratic process.
The CFTC's action has drawn criticism from lawmakers like Torres, who have called on the watchdog to accept the court's ruling and focus on regulating these markets to ensure transparency and protect consumers.
Torres wrote in the letter:
“The CFTC should focus on regulating exchanges, protecting consumers, and ensuring the integrity of elections.”
Continued legal battles could push traders onto unregulated platforms, further threatening the integrity of the election, he warned.
