Gambling on elections

A group of legislators is urging the CFTC to step in on gambling around election outcomes.

Why it matters: Besides Bitcoin itself, the crypto darling of 2024 is Polymarket, the blockchain-powered market for betting on future events.

• Election bets have driven it to its busiest month ever, by far.

By the numbers: July was a monster, with $387 million bet, after June had been its biggest month at $112 million.

• August isn't a week old, and it's already at $106 million.

Catch up quick: The CFTC proposed a rule in May that would ban listed so-called event contracts used to bet on U.S. elections.

• The comment period on the proposal closes tomorrow. Once that's done, they can work on a final rule.

The latest: Legislators sent a letter to the chairman of the CFTC asking him to step in. The letter reads:

• "Election gambling fundamentally cheapens the sanctity of our democratic process. Political bets change the motivations behind each vote, replacing political convictions with financial calculations," the letter argues.
• It further suggests that the very richest could both bet on candidates that they like and place large donations for that candidate, making it more likely that the candidate they bet on wins.

The intrigue: The letter points the finger at Wall Street, rather than blockchain entrepreneurs, however.

• The letter was signed by five senators and three members of Congress, all Democrats.

Flashback: In 2022, Polymarket settled with the CFTC and took steps to prevent people in the United States from using it.

• However, bets on the U.S. elections are driving most of the interest.
• More recently, the CFTC has been stepping in against such event-based markets.

The other side: These markets are going to exist either way, John Phillips, whose company Aristotle is part of running another market, called PredictIt, told Politico, as the CFTC started taking the issue on.

• "It's just a question of whether they're going to exist and operate in an orderly, regulated [and] fair fashion with common sense regulation."