Washington, D.C. – Today, U.S. Senator Catherine Cortez Masto (D-Nev.) led eleven of her Senate colleagues in requesting answers from Commodity Futures Trading Commission (CFTC) Chair Michael Selig on his plan to combat insider trading, manipulation, and fraud in prediction markets, which currently facilitate illegal gaming nationwide. Their letter follows reporting that trading volume for the market on whether Venezuela President Nicolás Maduro would be out of power by the end of the month spiked just six and a half hours before Maduro’s capture was announced.
“A newly created Polymarket account invested $30,000 on Friday in favor of Maduro’s exit, netting more than $436,000 in profit after Maduro was taken into custody Saturday morning. Polymarket even began offering a contract around 3 a.m. Saturday – an hour and a half before President Trump’s official announcement – on whether Maduro would be in U.S. custody by January 31. The trading volume for this contract reached $1.3 million,” wrote the Senators.
Senator Cortez Masto had previously led her colleagues in reminding the CFTC of their responsibility to prevent illegal gaming. Just last year, federal charges were brought against six individuals accused of participating in an illegal sports betting scheme using insider information. However, unlike legal sportsbooks, prediction markets do not alert gaming regulators about betting irregularities, coordination which curbs the use of insider information in wagers. Furthermore, event contracts creating wagers on military operations or other national security considerations risk exposing sensitive information to foreign adversaries like Communist China or Russia.
“Furthermore, the CFTC is expressly prohibited from allowing event contracts that involve gaming. The CFTC itself has made this clear. In the CFTC’s final rule promulgating the Dodd-Frank Wall Street Reform and Consumer Protection Act’s statutory language, the CFTC wrote that ‘its prohibition of certain “gaming” contracts is consistent with Congress’s intent to “prevent gambling through the futures markets” and to “protect the public interest from gaming.”’ By abdicating its responsibility to stop gaming in event contracts, the CFTC is violating both the letter and intent of the law and raising serious insider trading and now national security risks,” continued the Senators.
Read the full letter here. Additional signatories include Senators Richard Blumenthal (D-Conn.), Cory Booker (D-N.J.), John Hickenlooper (D-Colo.), Andy Kim (D-N.J.), Jeff Merkley (D-Ore.), Alex Padilla (D-Calif.), Jacky Rosen (D-Nev.), Adam Schiff (D-Calif.), Elissa Slotkin (D-Mich.), Chris Van Hollen (D-Md.), and Peter Welch (D-Vt.).
Senator Cortez Masto is a champion of Nevada’s tourism and gaming economy. Following the passage of the Republican tax law, which imposed greater taxes on gamblers, Cortez Masto introduced the FULL HOUSE Act to restore the 100% tax deduction on gambling losses. Last September, she introduced the WAGER Act, bipartisan legislation to protect legal sportsbooks and gaming businesses and help states like Nevada and Tribal communities reinvest their gaming revenues into their local economies. In the American Rescue Plan, Senator Cortez Masto secured $3 billion in funding to assist states with their economic recovery and their vital tourism industries, including Nevada. She also delivered resources to the state’s businesses and secured flexibility for the gaming industry.
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