As political prediction markets grow, politicians have begun trading contracts. On Oct. 5, 2026, Democratic Representative Don Davis introduced the “No Betting on Your Own Race Act.” The proposed legislation bars federal candidates, their spouses, dependent children, and campaign committees from purchasing betting contracts on the outcome of their own candidacies.
The ban covers contracts wagering on whether a candidate will win, remain in the race, or capture a specific share of the vote, spanning from the primary election stage through party conventions. Violators face civil penalties of up to $10,000 or three times the net profit from the transactions - whichever is greater.
Proxy trading is also prohibited. Candidates are forbidden from directing third parties to purchase contracts or funding their trades. To facilitate enforcement and monitoring, the Federal Election Commission (FEC) is tasked with maintaining a machine-readable registry of federal candidates, updated at least weekly.
Rules Emerge After Opponent Faces Sanctions
Davis introduced the bill following a real-world violation in his own congressional district. Prediction platform Kalshi previously penalized Laurie Buckhout - the Republican candidate for North Carolina’s 1st District and Davis’s opponent on the ballot. Kalshi suspended Buckhout’s account for three years and fined her $2,589.96 for purchasing contracts valued under $1,000 tied to her own victory.
Buckhout is not an isolated case. Kalshi has already banned three other congressional candidates for five years over similar violations.
For platform operators such as Kalshi or Polymarket, the bill provides safe harbor from liability provided they act in good faith. Exchanges must simply close offending accounts, cancel the transactions, and report the activity to the Commodity Futures Trading Commission (CFTC), the Department of Justice (DOJ), or the FEC.
Congress Catches Up to Internal Exchange Rules
Political pressure on betting platforms continues to mount in Washington. On Sept. 23, 11 Democratic senators called for a special hearing before the Senate Banking Committee to assess prediction markets. Separately, the CFTC warned exchanges about contracts whose outcomes could be manipulated by individuals with direct influence. Despite regulatory scrutiny, Kalshi continues to expand, submitting a proposed margin framework for contracts tied to political, economic, and commercial events.
Davis’s legislative push essentially elevates bans previously enforced solely by private operators into federal law. Prediction exchanges have already demonstrated their ability to penalize rogue politicians, and lawmakers are now stepping in to make those rules universally binding.
Reported by crypto.news.
Also read: CFTC Breaks Congressional Deadlock - Chair Selig Approves 2 Crypto Rules Using Existing Authority
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
