- Representative Don Davis has introduced the “No Betting on Your Own Race Act,” proposing civil penalties of up to $10,000 or triple the net financial gain for candidates trading on their own elections.
- The legislative push follows a high-profile disciplinary action by prediction exchange Kalshi against Laurie Buckhout, Davis’s Republican challenger, who bet on her own race.
- With Congress adjourned until after the November midterm elections, the bill cannot take effect before the 2026 midterms, leaving existing exchange-level rules as the primary enforcement mechanism.
Federal Legislation Aims to Bar Candidates from Political Prediction Markets
In response to growing scrutiny surrounding election betting, Representative Don Davis has proposed new federal legislation titled the “No Betting on Your Own Race Act.” The bill targets political candidates and their affiliates who participate in prediction markets tied to their own campaigns, establishing substantial financial deterrents against self-dealing and insider trading.
Under the bill, a violation would carry a civil penalty of $10,000 or three times the net financial gain linked to the transaction, whichever is higher.
We don’t want our athletes to bet on their games. A candidate running for federal elected office should be treated exactly the same and should not be allowed to trade on their own election,
Davis said. Davis stated that the proposal is intended to prevent market interference and insider trading while stopping candidates and family members from cashing in
on their elections.
Prohibiting Indirect Trades and Establishing Safe Harbors
The proposed measure casts a broad net beyond directly held positions. Rather than limiting the prohibition to contracts purchased directly by candidates, the legislation extends the restriction to certain trades conducted through other people. Under the proposal, a candidate could violate the rule by directing or requesting another person to acquire or dispose of a covered contract. Knowingly providing money for another person to obtain an interest in such a contract could also fall within the prohibition.
To enforce the provisions, the Federal Election Commission (FEC) would be mandated to maintain a free, machine-readable database of federal candidates, updated at least once weekly. Candidates would also be notified of the trading restrictions directly upon filing for federal office. If an individual already held an election position prior to filing, the measure provides an allowance to divest under the trading platform’s minimum divestment period.
The legislation shields prediction market operators and brokers from strict liability. Platforms would not face penalties simply for facilitating a prohibited transaction if they demonstrate good-faith efforts to close accounts, unwind or void trades, and report suspicious transactions to the Commodity Futures Trading Commission (CFTC), the Department of Justice (DOJ), or the FEC. While the bill avoids naming specific exchanges like Kalshi or Polymarket, its definition of political event contracts directly encompasses their primary offerings.
Scrutiny Mounts Following Exchange Disciplinary Actions
The issue gained national attention after Kalshi disciplined Laurie Buckhout, the Republican candidate challenging Davis in North Carolina’s 1st Congressional District. In August, Kalshi handed Buckhout a three-year suspension and a $2,589.96 fine after discovering she traded contracts on her own race valued under $1,000.
I bet on myself. Literally,
Buckhout said after the disciplinary action. It was a dumb mistake, and as soon as I learned there was an issue, I worked to make it right.
Kalshi treats political candidates as participants possessing direct influence over contest outcomes, strictly barring them from wagering on their campaigns. Earlier in 2026, the platform similarly issued five-year suspensions to three other congressional candidates for comparable infractions. The incident mirrors wider congressional concerns; House Administration Committee Chair Bryan Steil previously pursued similar prediction market curbs inside H.R. 7008, an effort focused on reforming lawmaker stock trading.
Why This Matters
Prediction markets have become a central focus of regulatory and legislative battles in Washington. On September 23, all 11 Democrats on the Senate Banking Committee asked Chair Tim Scott to convene a public hearing to investigate political event contracts and their risks to retail consumers and market stability. Their request followed meetings between Republican committee members and Kalshi CEO Tarek Mansour, alongside concerns over whether certain performance-based contracts qualify as security-based swaps under Securities and Exchange Commission (SEC) jurisdiction.
Concurrently, the CFTC has warned platforms regarding markets driven by specific actions of named individuals, demanding details on how exchanges police nonpublic information. Even as scrutiny climbs, operators are seeking growth: Kalshi recently filed for regulatory approval of a margin framework to allow eligible participants to trade non-sports event contracts without fully pre-funding potential losses upfront.
However, immediate statutory changes remain out of reach. Davis introduced the bill during a pro forma session while the House and Senate remain in recess until after the November 3 midterm elections. Because the legislative text would only apply forward from its enactment date rather than retroactively, political event contracts covering congressional majorities and individual races will remain actively traded through Election Day under internal platform guidelines alone.
Frequently Asked Questions
What penalties would candidates face under the proposed bill?
Under the “No Betting on Your Own Race Act,” candidates found guilty of trading on their own election faces a civil fine of $10,000 or triple the net financial profit resulting from the trade, whichever amount is greater.
Can the bill impact the upcoming 2026 midterm elections?
No. Both the House of Representatives and the Senate are out of regular voting session until after the November 3 midterms. Even if passed at a later date, the legislation applies only on a prospective basis starting from the date it is enacted into law.
Are prediction market platforms penalized if a candidate trades?
No. Trading venues and brokers are shielded from penalties for facilitating illicit trades provided they act in good faith to terminate accounts, void transactions, and report the infractions to the CFTC, FEC, or DOJ.
