To most of us America’s Commodity Futures Trading Commission (CFTC) is a little known financial watchdog, if known at all.
But it has enormous power in the opaque stockbroker world of Futures or so-called Derivatives, where traders bet millions, and sometimes billions, on the future price of essential commodities – name whatever comes to mind: Oil, wheat, steel, et al – even, it seems, the outcome of U.S. presidential elections.
With the recent introduction of betting on Bitcoin, the success rate of SpaceX rocket launches, the probability of hurricanes hitting the U.S. East Coast, et al, Derivatives has become the biggest gambling game in town.
Forget junkets in Macau, or whales in back-room Vegas, the Futures market shrinks most other wagers to the relative size of minnows.
So much money–millions and millions of dollars–is being placed on the possible results of this November’s U.S. elections to choose the next president, and many of the next senators and congressmen and women, that the CFTC is now planning to ban all bets on political futures outcomes.
Yes. Truly.
Frenzy
The current round of election betting frenzy began over the “will he, won’t he” presidential campaign of sitting White House tenant Joe Biden.
The New Zealand-based PredictIt website, for example, which takes bets on political and financial outcomes, was hit by a tsunami of heavy-duty action.
But now the CFTC, which polices Derivatives and Futures, and other U.S. government agencies, are looking to outlaw all political betting, claiming that it undermines the very nature of democracy itself.
“To me, it is enormous corruption,” warns Oregon Democrat Sen. Jeff Merkley.
“A well-heeled political or corporate interest could someday come to think: ‘Hey. I will spend millions of dollars smearing some candidate to make sure the candidate I bet on wins.’”
Big Money
CFTC Chair Rostin Behnam has now ratcheted-up opposition to election betting on exchanges – and the activities of PredictIt in particular.
Another exchange, KalshiEx, that specialises in Futures bets, was also hoping to accept big money wagers of up to US$100 million (£76m) on the outcomes of the November elections, citing that “there’s already money in politics”.
But it’s been blocked in this endeavour by the government and is now locked in a legal wrangle over the issue with the CFTC.
“[Such bets] ultimately commoditize and degrade the integrity of the uniquely American experience of participating in the democratic electoral process,” CFTC Chair Behnam asserted earlier this year. “[We are not] an election cop.”
Outlaw
KalshiEx Co-Founder Tarek Mansour, for his part, counter-argues: “[The 2024 presidential race] is expected to have significant effects on the economy and personal finances of everyday Americans.
“[And as such], it would be wrong to outlaw betting on the event.”
Indeed, it’s conservatively estimated that an astonishing US$12 billion (£9.12bn) will have been spent on political advertising by all parties by the time the nation goes to the polls on November 5.
But, as is often the case, if betting is legally banned, gambling or predictive action will still continue by the simple expedient of going abroad or off-shore.
As any gaming insider can note:
Plus ça change?
