SENATORS MCCORMICK, GILLIBRAND INTRODUCE LEGISLATION TO STRENGTHEN PREDICTION MARKETS AND PROTECT EVERYDAY INVESTORS

Bill establishes clear rules of the road for event contracts while keeping the United States at the forefront of financial innovation

WASHINGTON - Senator Dave McCormick (R-PA) and Senator Kirsten Gillibrand (D-NY) today introduced the Prediction Market Act of 2026, legislation to establish a comprehensive regulatory framework for prediction markets, ensuring these powerful financial tools operate with transparency, integrity, and strong protections for everyday Americans.

Prediction markets have emerged as some of the most accurate forecasting tools available, turning collective knowledge into real-time signals about future political, economic, and other outcomes. Beyond forecasting, these markets provide real economic value, allowing agriculture producers to manage weather conditions, investors to hedge portfolio risk, and small businesses to protect themselves against sudden cost increases. With proper guidelines in place, the United States can lead the responsible development of this growing industry rather than allow regulatory uncertainty to push it offshore.

"Prediction markets are already changing how Americans understand and manage risk," said Senator McCormick. "This legislation gives these markets the clear rules they need to grow responsibly, protects everyday investors who are participating in them, and ensures the United States remains the global leader in financial innovation."

"Elected officials should be working for the people they represent - not lining their own pockets with insider information. Americans deserve financial markets that are fair, transparent, and not tilted in favor of those with privileged access," said Senator Gillibrand. "This commonsense, bipartisan bill puts strong guardrails in place to protect consumers, prevent insider trading, and hold prediction market platforms to standards of integrity."

What does the bill do?

The legislation takes several concrete steps to modernize the regulatory framework for event contracts and prediction markets. These steps include:

• Defines an event contract, public interest, and relevant terms to limit uncertainty in prediction markets.
• Requires individual review of event contracts that involve the enumerated activities, including violence, using newly established criteria to scope the public interest determination.
• Establishes enhanced certification standards on listing event contracts and disclosures prioritizing retail customer readability.
• Requires exchanges that offer event contracts to implement safeguards related to advertisement, Know-Your-Customer standards, and fund segregation.
• Prohibits lawmakers and high-ranking government officials from owning event contacts, eliminating any potential conflict of interest.
• Creates a new Commodity Futures Trading Commission (CFTC) Office of the Retail Advocate to support the interests of retail investors.
• Establishes an Advisory Council on Consumer Protection to analyze and recommend additional safeguards for customers.
• Creates an Innovation Advisory Committee to advise the commission on policy issues at the intersection of technology and finance.
• Requires the CFTC to study and report to Congress on new developments in these fast-moving markets.

Background

Prediction markets operating under CFTC oversight are already subject to rules protecting against fraud and manipulation. However, the rapid growth of retail participation in these markets has outpaced the existing legal framework, creating potential gaps in consumer protection and regulatory clarity. This legislation addresses those gaps while preserving the innovation and discovery potential that make prediction markets valuable to the public.

Read the full bill text here.