The Takeaway: A New Bill To Ban Election Betting
It’s been quite a week for gambling issues on Capitol Hill. First, the Senate Judiciary hearing on sports betting dominated the news cycle this week for the industry.
Now, we have a new House bill that would ban election betting. It’s a companion to an earlier Senate bill from Oregon’s Jeff Merkley.
More from one of the bill’s two Democratic sponsors, Rep. Jamie Raskin:
“With distrust in our electoral system at an all-time high, we must crack down on gambling in all U.S. elections. Our democracy demands reliable and transparent processes to cast ballots and tally results, not a horserace clouded by gambling odds and bets placed. I am proud to go all-in with Congresswoman Salinas and Senator Merkley in calling on Congress to ante up and pass this commonsense legislation.”
I have pooh-poohed the idea that we’re close to getting federal regulation or interference on sports betting writ large. I am less confident that Congress won’t act to stop election betting, which was a big topic during the presidential election cycle. Kalshi rose to prominence in the fall after a court ruling cleared the way for legal election betting.
I’ll run through some reasons why a Congressional ban is an inherent threat to the industry, and then some arguments against a possible ban coming to reality.
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Why an election ban is a real threat
Election betting isn’t popular across government. I lived through the time when West Virginia opened up election betting via sportsbooks, and hoo boy, was the reaction immediate and negative. Lawmakers and folks holding offices that are related to elections really seem to hate the idea of betting on elections. And elections have been contentious enough in recent times without the added layer of gambling.
Simple bills > complicated bills. If you are betting on whether a bill will make it to the finish line, I’ll take an uncomplicated bill over one with lots of language. The bill is short and just amends the Commodity Exchange Act. Simplicity doesn’t make it certain that a bill passes, it just makes it more likely to get adopted or tacked onto some other piece of must-pass legislation.
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Why an election ban won’t come to fruition
It’s a Democratic issue (so far). Like what we have seen so far on the national stage to rein in sports betting, the efforts have come from Democrats. (The bill sponsors so far are D’s, as are those lawmakers who supported a ban outside of legislation.) Democrats are losing power in both the legislative and executive branches. Until we see some Republicans sign onto these efforts in a meaningful way, there’s less of a threat as of today.
Passing legislation is hard. Despite how fast we saw new sports betting laws get passed in the past five years, it’s hard to pass a bill. It’s even harder to pass anything in Congress; most legislation now gets negotiated and included in larger packages.
Is it really that big of a deal? I am not sure there’s a groundswell of opposition to election betting/prediction markets as we sit here. Kalshi was a media darling in the month leading up to the election. Millions of people were betting/trading during that month. Also a “ban” doesn’t accomplish that much, as offshore sportsbooks, regulated sportsbooks internationally and others (ie Polymarket) are still going to take bets on US elections, and democracy won’t collapse. (It’s also worth noting that there used to be lots of betting on US presidential elections. It’s sort of ironic that part of the reason those betting markets went away was because of the rise of polling, an industry that has its own challenges.)
TBD/neutral
What does a lack of effective lobbying mean? There is a bit of a lobbying conundrum here. There’s no huge monied lobbying interest that wants betting banned, but there are also no heavyweights lobbying against it (at least that I can see on either side). Sure, there will be Kalshi and Robinhood, presumably, but it’s not the kind of muscle that can kill a bill. A lack of meaningful lobbying could be good or bad for the proposed ban’s chances in Congress.
What will the CFTC want under the new administration? The Commodity Futures Trading Commission has been the key opponent to election betting thus far. It’s still involved in an active court case. There is some reason to believe the incoming Republican administration would back off of rules that would prevent Kalshi et al from operating. Here’s the handicapping of who will lead the commission. All of that is separate from a legislative effort, of course, but it might make a difference.
Will election betting get caught up in wider anti-gambling sentiment? There’s a lot of negative press for the sports betting industry right now. If somehow election betting/prediction markets gets lumped into that, it would be a poor outcome for the sector.
Gambling news roundup for Dec. 19
The latest in the court case between the NFL Players Association and DraftKings over NFTs.
The Catholic Church is pushing back against expanded gambling in Brazil.
The Federal Trade Commission announced a new rule related to disclosure of resort fees.
The Associated Press wraps up where the US sports betting industry finds itself heading into 2025.
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