A new bill in Congress, the CLARITY Act, aims to hand the Commodity Futures Trading Commission explicit authority over prediction markets. The legislation comes as platforms like Kalshi and Polymarket have drawn increased attention from regulators and lawmakers.
What the bill does
The CLARITY Act — short for Commodity Futures Trading Commission Authority to Regulate and Limit Internet Trading and Yield — would amend the Commodity Exchange Act. It would give the CFTC clear power to oversee markets where people bet on the outcome of events, such as elections, sports, or economic indicators. Currently, the agency's jurisdiction over these platforms is murky, and some have argued they operate outside federal oversight.
Under the bill, the CFTC could set rules for how prediction markets are run, including registration requirements, disclosure standards, and position limits. It could also ban certain types of event contracts if they involve illegal activity or harm the public interest.
Why now
Prediction markets have grown rapidly in recent years. The 2024 U.S. election cycle saw millions of dollars in bets placed on outcomes, raising concerns about market manipulation and the integrity of democratic processes. The CFTC has already taken some enforcement actions, but the agency has said it lacks clear statutory authority to regulate the entire sector.
Supporters of the bill argue that bringing prediction markets under CFTC oversight would protect consumers and ensure fair, transparent markets. Critics worry that too much regulation could stifle innovation or push activity offshore.
The CLARITY Act has been introduced in the House and referred to the Agriculture Committee, which oversees the CFTC. No hearing date has been set yet. The bill's sponsors say they hope to move it through the legislative process before the next election cycle.
