Despite Carsi and Polymarket announcing new insider trading regulations for their platforms, two bipartisan senators said Wednesday they will not stop their efforts to ban sports prediction market contracts.
“This has to be more than an ambitious statement by these companies,” Sen. Adam Schiff, D-Calif., said on CNBC’s “Squawk Box” when asked about the new rules these platforms have self-imposed.
Kalsi announced on Monday that he would preemptively block politicians, athletes and other “officials” from betting on their campaigns and sporting events.
On the same day, Polymarket announced it would set up its own guardrails to combat insider trading and market manipulation.
The new restrictions come after Schiff and Sen. John Curtis (R-Utah) introduced legislation that would give states, rather than federal regulators, control over sports betting and casino-style gaming.
The bill would prohibit entities registered with the Commodity Futures Trading Commission from listing such forecasting contracts.
In a joint interview with CNBC on Wednesday morning, the senators said companies’ efforts to police themselves aren’t enough.
“I don’t think that’s enough,” Schiff said. “It’s one thing to say, ‘This is our policy.’ It’s another thing to actually take steps to prevent that from happening on those platforms.”
Curtis said his bill with Schiff, the Prediction Markets Gambling Act, aims to “keep speculative financial products out of areas where they shouldn’t be.”
“You have to ask, ‘What could possibly go wrong?'” he told CNBC. “Imagine betting that a high school athlete will get injured on the day of a high school game…you can see how wrong that could go.”
Schiff warned of the potential for “an enormous amount of insider trading” that current regulations cannot address. He pointed to recent reports that some bettors are making large sums of money by predicting the events of the Iran war with great accuracy.
“This is very suggestive of insider trading, and even if you could do it using blockchain, there’s no way to really regulate that. At least not currently,” he said.
Prediction markets, which allow users to bet on almost anything quickly and easily, have become extremely popular and accessible in recent years. Its popularity has led to increased criticism across the political spectrum.
“The proliferation of gambling is bad for society,” Rep. Alexandria Ocasio-Cortez of New York said last week in response to Polymarket becoming Major League Baseball’s exclusive prediction market exchange partner.
At the same time, the economic impact of widespread gambling is coming under increasing scrutiny. Economists at the New York Fed said in a report Wednesday morning that sports betting “could have a dramatic impact on household financial stability.”
“Despite the small percentage of people who bet on sports after legalization (about 3% of the population), overall credit delinquencies increased by about 0.3 percentage points,” Fed researchers said.
While any bill faces a difficult road in Congress, Schiff and Curtis expressed optimism that their bill has enough bipartisan support to pass the House and Senate.
“I think this is one of those areas where we agree on more than we disagree, and I think those areas of disagreement are getting narrower and narrower,” Curtis said.
Disclosure: CNBC and Kalsi have a commercial relationship that includes a minority investment in CNBC.
Correction: Sen. Adam Schiff represents California. A previous version of this article incorrectly listed the state.
