Writing that contracts on death or physical injury can have “grave and perverse moral and geopolitical implications,” a group of six U.S. senators Monday sent a letter to Commodity Futures Trading Commission (CFTC) Chair Michael Selig demanding that such contracts be banned.
The contracts all appeared on Polymarket’s international platform, which is “ostensibly” not available in the U.S., wrote the senators, but easily accessible via VPN. While Polymarket is a U.S.-based company, its international platform does not fall under the CFTC’s purview. The senators implored Selig and the CFTC to “provide clarity and take an active role in regulating this space,” though it’s not clear how the agency could influence a platform operating outside of the U.S.
The letter is the second from congressional members in 10 days, and keeps the pressure on an agency that politicians from both parties say has gone rogue under Selig’s short watch — he was confirmed for the position in December.
Pressure building
A group of 23 Democrats sent Selig a letter on Feb. 13, pressuring him to ban sports event contracts, which mimic traditional sports betting, from available prediction market offerings. It does not appear that Selig has responded to that letter.
Monday’s letter was signed by Connecticut’s Richard Blumenthal, New Jersey’s Cory Booker, Nevada’s Catherine Cortez Masto, Virginia’s Tim Kaine, Nevada’s Jacky Rosen, and California’s Adam Schiff. Booker and Schiff are members of the Senate Agriculture Committee that approved Selig’s nomination. Booker did not vote and Schiff voted against approving Selig.
Late last week, committee Chair John Boozman, a Republican, called Selig and the CFTC out in an interview with Semafor. Speaking in regard to the agency allowing licensees to self-certify and offer sports event contracts, Boozman said, “This is an area that just caught fire; I don’t think anybody expected it to grow at the rate that it has. But there is concern; it’s the Wild West. There’s not much regulation.”
The Commodities Exchange Act (CEA) explicitly bans contracts on assassination, terrorism, war, and gambling, and the CFTC has a regulation that also explicitly bans such contracts. Despite that, prediction markets Kalshi and Polymarket have self-certified contracts that are at odds with that mandate since early 2024, and the CFTC has not pushed back.
In the latest letter, the Senate Democrats pointed to recent contracts on the Polymarket international platform called “Artemis II Explodes?,” “Maduro out by …,” and “Will Russia capture Myrnohad by …” as key violations of the law “that present dangerous national security risks, including creating incentives
to incite violence, foment geopolitical conflicts, and disclose classified information. These
concerns have already been realized in recent months as these contracts proliferate on exchanges.”
Answer me this
The senators also address the issue of insider trading, which is not specifically banned by the CFTC, and say that offering death and physical-injury contracts “risks incentivizing real-world harm” and are “encouraging actors to influence or precipitate those outcomes for personal profit.”
The letter closes with a list of seven multi-part questions that in part ask Selig to clarify if he and the CFTC would have allowed the contracts in question in the U.S., how the contracts would be resolved, and exactly how the CFTC defines assassination, war, and terrorism.
In addition, the lawmakers queried Selig about how many times in the last 12 months the CFTC denied a certification for violating the CEA ban on contracts about assassination, war, terrorism, and gambling, and asked if he would allow such contracts to be offered on U.S. exchanges.
“The letter and spirit of the CEA’s prohibition on war, terrorism, and assassination contracts are clear. We expect the CFTC to enforce the law, and stand ready to provide the Commission the resources it needs to fulfill its statutory mandate,” the senators wrote in closing.
