Two US senators introduced the Prediction Market Act of 2026, which would create a more complete regulatory framework for prediction markets and event contracts. The legislation is being presented as a bipartisan effort, sponsored by Republican Senator Dave McCormick and Democratic Senator Kirsten Gillibrand, and it lays out a series of rule changes intended to modernize oversight in the sector. The Prediction Market Act’s Safety Checklist At the core of the bill is an effort to reduce uncertainty by clearly defining key terms. The Prediction Market Act would define what an event contract is, what qualifies as public interest, and other relevant terminology. The goal is to narrow ambiguity in how these markets operate, especially when they relate to matters that could carry higher stakes. Related Reading: Hyperliquid Jumps Into The Betting Boom With New ‘Outcome Tokens’ For Real-World Events The proposal also includes a requirement for additional scrutiny for certain contracts. Under the bill, event contracts involving enumerated activities—including violence—would require individual review, using newly established criteria to determine how the public interest standard should be applied. The bill further aims to strengthen how these markets are offered to the public. It would establish enhanced certification standards for exchanges that list event contracts, along with disclosures designed to be easier for retail customers to understand. Beyond disclosures, the Prediction Market act would require exchanges such as Polymarket and Kalshi to implement additional operational safeguards, including measures related to advertising, and Know-Your-Customer (KYC) requirements, with the intent of improving protections around how they interact with customers funds. Key Institutional Pieces Of The Bill The Prediction Market Act also includes conflict-of-interest rules for public officials. It would prohibit lawmakers and high-ranking government officials from owning event contracts. The act would also establish a Commodity Futures Trading Commission (CFTC) Office of the Retail Advocate to support retail investors’ interests. It would also form an Advisory Council on Consumer Protection, tasked with analyzing potential gaps in safeguards and recommending additional protections for customers. Related Reading: US Rep. Calls Bitcoin A ‘Geopolitical Weapon Used By Multiple Adversaries’ In addition, the act would create an Innovation Advisory Committee to advise the commission on policy questions at the intersection of technology and finance, reflecting the way these markets rely on modern systems. Finally, the Prediction Market Act would require the CFTC to stay on top of changes by studying and reporting back to Congress on developments in these fast-moving markets. The intent, according to the framing of the bill, is to ensure oversight keeps pace with how prediction markets evolve rather than lag behind new practices. Featured image from OpenArt, chart from TradingView.com
