U.S. Rep. Don Davis (D-N.C.) has introduced the “No Betting on Your Own Race Act,” a bill designed to prohibit federal candidates from trading on prediction market contracts related to their own elections. This legislative effort gained traction following a penalty issued to Davis’s Republican opponent, Laurie Buckhout, by Kalshi for trades tied to her candidacy, underscoring concerns about insider trading. The proposed bill aims to formalize existing platform policies with significant financial penalties for violations.
With the midterm elections rapidly approaching, the integrity of political prediction markets is under intense scrutiny. While these platforms often serve as barometers for electoral outcomes, one prominent House Democrat is pushing for a significant restriction: banning candidates from betting on their own races.
Representative Don Davis, a Democrat from North Carolina, formally introduced legislation on Monday that would prohibit candidates for federal office from participating in prediction market contracts directly related to their own elections. This exclusive announcement from his office to CNBC signals a serious legislative effort to address concerns surrounding these burgeoning markets.
Dubbed the "No Betting on Your Own Race Act," the bill was introduced during a pro forma session of the House of Representatives. It aims to enshrine into federal law what many prediction market platforms, including Kalshi, have already been striving to enforce: preventing individual candidates from trading on their own contracts due to the inherent risk of insider trading and conflicts of interest.
Under Davis's proposed legislation, individuals found placing trades on event contracts tied to their own candidacy would face severe financial penalties. The bill stipulates a minimum fine of $10,000 or an amount equivalent to three times the net financial gain derived from the illicit trades, whichever sum is larger. This demonstrates a clear intent to deter such practices with substantial disincentives.
"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 stated emphatically. He further added, "To establish consistency and ensure all federal candidate campaign committees understand this, Congress must pass this common-sense legislation."
The impetus for Davis's bill directly stems from a controversy involving Laurie Buckhout, his Republican challenger in North Carolina's closely watched 1st Congressional District. Buckhout reached a settlement with the prediction market platform Kalshi in August after the company discovered she had traded on contracts related to her own candidacy. She was subsequently issued a penalty of nearly $2,600 and suspended from Kalshi for three years.
Addressing the incident at the time, Buckhout admitted, "I bet on myself. Literally. It was a dumb mistake, and as soon as I learned there was an issue, I worked to make it right." However, Davis publicly condemned her actions in a post on X, calling her decision to place such trades "a disqualifying breach of public trust."
Given that both the House and Senate are not scheduled to reconvene until after the upcoming midterm elections, Davis's proposal faces minimal chances of being enacted during the current electoral cycle. Nonetheless, it underscores a growing legislative appetite to regulate this emerging sector.
In April, the Senate successfully passed a resolution banning its members and staff from trading on prediction markets, a move that was lauded by leading platforms such as Kalshi and Polymarket. However, that resolution did not extend its reach to non-incumbent candidates vying for U.S. Senate seats.
While the House of Representatives has yet to pass similar restrictions, several resolutions advocating for such bans have already been put forward, indicating a broader push for greater transparency and ethical conduct in political prediction markets across Capitol Hill.
