Politics is full of bold, outlandish predictions. The really confident ones can put their money where their mouths are — literally — on political market sites like PredictIt. PredictIt is a website that is not dissimilar to a stock market for politics. Betters can buy “shares” on a particular political outcome, like who will be the GOP nominee. As of Sunday afternoon, Trump winning the nod sits at a 58 cent bet. Should the former president win, every Trump yes share gets a dollar, and every Trump no share gets nothing. Like any good market-based betting, it's a good indicator of what a group of people think might happen, even if it's not ultimately right. Though bets are limited to $850 on PredictIt, it and other political market sites have attracted a mix of eclectic hardcore traders who make real money obsessively moving shares, more casual users who put up a few bucks and, yes, even political professionals. But as sites like PredictIt became more popular, they're attracting scrutiny from the federal government. This time last year, the Commodity Futures Trading Commission — the federal agency that ended up with oversight of the industry — yanked a letter that effectively allowed PredictIt to operate “for academic purposes only.” The platform sued, and late last month scored a significant victory in the Fifth Circuit that effectively preserves the status quo for now, letting the site continue to operate. That, however, is not the last word. While the PredictIt fight rumbles through the court, another platform — Kalshi — has asked the CFTC to bless a plan to launch election markets on congressional control on a far larger scale, like theoretically allowing some Wall Street firms to wager millions. But there have been few signs over the last year that the agency’s longstanding concerns about the markets running afoul of the “public interest” have been addressed. Perhaps more critically, the fight has escaped out of the wonky confines of a financial regulatory body, and is now attracting the attention of prominent members of Congress, including Sens. Jeff Merkley (D-Ore.) Sheldon Whitehouse (D-R.I.) and Elizabeth Warren (D-Mass.). For the market’s detractors, there is concern that election wagering could become the next speculative trading frenzy, à la crypto and meme stocks. But the fears run deeper, too. Investor advocates, government watchdog groups and progressives warn that the markets could fuel questions about the integrity and foundation of U.S. elections. “Kalshi is going to unleash billions — if not tens of billions — of dollars in betting on what will ultimately be every election in the country, from the presidency to the local dog catcher,” said Better Markets CEO Dennis Kelleher, who advocates for stricter oversight of Wall Street. Proponents of the industry argue that their critics, although well intentioned, have it all wrong. Instead of eroding confidence in elections, they say, prediction markets actually increase it by providing more information to the public by giving an avenue to forecast outcomes — or, at least, let people make a financial hedge against a political outcome they don’t like. “Polls and focus groups are very valuable if you want to get behind why people think the way they do or why they act the way they do,” said John Phillips, the CEO of PredictIt’s operating company. “Prediction markets are very effective — and more effective than a lot of polling — in forecasting ahead of time what is likely to happen.” Even so, the future of political markets remains uncertain, as they have gotten increasingly more popular. (Phillips told Score that there’s at least 80,000 people who have at least some money in their PredictIt accounts.) PredictIt’s legal fight will continue, and the attention of Congress has some proponents believing that the CFTC will be less likely to go along with the industry at large. But, supporters say, the markets have momentum — with or without government approval. “I think that it's not a question as to whether these markets will exist,” Phillips said. “This activity is either going to be safe and regulated and produce useful research and accurate forecasting and be transparent and fair if it's regulated, or it's going to take place offshore … where there's no regulation, no consumer protection, no transparency.” Good Monday morning. A huge thank you to Declan (dharty@politico.com; @declanharty), our capital markets reporter, for teaming up for today’s topline. As for me? Parting is such sweet sorrow. This last week has been fun, but Madison (mfernandez@politico.com; @madfernandez616) returns tomorrow to take back the helm of Score. You can still reach me at zmontellaro@politico.com or @ZachMontellaro. Days until the Mississippi primary: 1 Days until the RI-01 and UT-02 special election primaries: 29 Days until the Louisiana primary: 68 Days until the 2023 election: 92 Days until the Republican National Convention: 343 Days until the Democratic National Convention: 378 Days until the 2024 election: 456
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