US Congressman Ritchie Torres has called on the Commodity Futures Trading Commission (CFTC) to regulate election prediction markets instead of banning them.
In a letter to CFTC Chairman Rostin Behnam, Torres recommended that the agency focus on promoting responsible innovation and partnering with platforms like Kalshi and Polymarket to ensure that election prediction markets are properly regulated, rather than pushing traders to unregulated and illegitimate platforms.
Torres’ letter comes after a September 6 court ruling partially overturned the CFTC’s attempt to block Kalshi, a U.S.-based election prediction platform. Torres stressed that further legal challenges could harm election integrity and consumer protections, while also facilitating the growth of illegal platforms.
“The CFTC has a mission to promote responsible innovation.”
He called on the agency to work with regulated platforms to ensure election-related contracts are conducted transparently and securely within a legal framework.
Amid uncertainty and regulatory pressure, Polymarket has seen a significant decline in activity. According to Dune Analytics, Polymarket’s daily active traders have dropped nearly 40%, from 12,595 on September 11 to 6,846 on September 17. The platform’s daily volume has also plummeted, from $37.2 million to $5.9 million, a drop of 85.6% over the same time period.
Source: Dune Analytics
The decline came after the CFTC proposed restrictions on certain event contracts, particularly those linked to political outcomes. The agency has expressed concerns about the potential for market manipulation, citing instances of false information, such as a fake poll involving musician Kid Rock, that have distorted market values.
Despite facing regulatory challenges, Polymarket has gained some mainstream recognition, with Bloomberg recently integrating the platform into its financial terminals. This shows the growing interest in decentralized prediction markets, even as regulators are increasing scrutiny of the sector.
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 prediction contracts. The platform hailed the decision as a historic step, allowing Americans to legally trade on election results for the first time in a century.
However, the CFTC quickly filed an emergency motion to block Kalshi’s election contracts, citing concerns about potential manipulation. The agency argued that the election market could undermine public confidence in the democratic process.
The CFTC’s action has faced criticism from lawmakers like Torres, who have urged the agency to accept the court’s ruling and focus on regulating prediction markets to ensure transparency and consumer protection.
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