National Regulation of Online Prediction Markets

Summary#

This bill would set national rules for online prediction markets (websites or apps that let people bet on non-financial events such as sports or elections). It would make states the main regulators by requiring each state that wants legal online prediction markets to apply for an approved state program. The stated goal is to stop fraud and manipulation, protect consumers and minors, and give states authority to enforce wagering laws.

Key changes:

• State control: Online prediction markets may operate in a State only if that State has an approved State wagering program. The U.S. Attorney General reviews and approves those state programs.
• Consumer protections: New rules require age and identity checks, self-exclusion lists (including a national list), reserve funds, withdrawal rules, limits on deposits, affordability checks, and money set aside for treatment and education on gambling harm.
• Market rules and bans: The bill bans certain listings (e.g., bets susceptible to manipulation, bets about death or war), bars proposition bets on amateur and intercollegiate sports, and bans wagers on sporting events after they begin.
• Advertising limits: Ads must identify the market, give addiction resources, not target minors or problem gamblers, and face time and content limits.
• Enforcement and penalties: The Attorney General can sue for injunctions; violations can bring fines of at least $50,000 per violation and up to 2 years in prison. State attorneys general can also bring civil actions.
• Data and reporting: Operators must keep detailed records for at least 6 years and provide anonymized wagering data in real time (no later than 24 hours). Operators must report suspicious transactions to state regulators and, in many cases, simultaneously to sports organizations.

What it means for you#

• Operators (companies that run prediction markets):

  • Must get a state license where they operate and pass background checks for owners and key staff.
  • Must verify users’ identity, age (minimum 21), and location before allowing wagering.
  • Must keep detailed records for 6 years and share anonymized wagering data quickly with regulators.
  • Must maintain reserve funds to cover customer balances and unsettled wagers.
  • Must follow limits on deposits, ban credit-card deposits, run affordability checks for large wagers, and spend part of revenue on treatment and education.
  • Face fines and possible criminal penalties for violations.

• People who use prediction markets:

  • Must be 21 or older to open accounts or bet.
  • Can put themselves on a state or national self-exclusion list to block access or set wager limits.
  • Will see clearer disclosures about odds, bonuses, and withdrawal rules before placing wagers.
  • Could face affordability checks if planning large deposits.

• States and State regulators:

  • Must create or designate a regulatory entity and submit an application to the Attorney General to allow operators in-state.
  • Must set standards covering licensing, monitoring, data sources for resolving wagers, advertising, and consumer protections.
  • Will have authority to audit, inspect, and enforce wagering laws. The Attorney General can revoke state program approval for failing standards.

• Sports organizations:

  • Can request restrictions to protect contest integrity and receive suspicious-transaction reports (usually without personally identifiable information, except for certain covered individuals).
  • Operators must cooperate with sports organizations in investigations tied to sporting events.

• Law enforcement / Federal government:

  • The Attorney General issues implementing rules and approves state programs.
  • The Attorney General can bring civil or criminal actions; the statute sets minimum fines and prison terms for violations.

Expenses#

No publicly available information.

Possible cost categories that follow from the bill:

• Costs for the Attorney General to review state applications, write rules, and carry out revocations or oversight.
• Costs for States to set up or expand regulatory entities, run licensing and background checks, audits, and enforcement.
• Compliance costs for operators to build identity/location verification systems, maintain records and reserves, perform affordability checks, and change advertising and product offerings.
• Possible costs for treatment and education programs funded by operator-set-asides.
• Potential costs to sports organizations and law enforcement to receive and act on suspicious transaction reports.

Proponents' View#

• The bill appears intended to give States back primary control over online prediction markets and to close gaps where foreign or unregulated sites could offer wagering to U.S. users.
• The bill appears intended to reduce fraud and manipulation by banning listings vulnerable to manipulation, requiring source-verified data for outcomes, and requiring suspicious-transaction reporting.
• Supporters may argue the bill would protect young people and problem gamblers through a national self-exclusion list, age limits of 21, deposit and advertising limits, and treatment funding.
• The bill could be seen as improving transparency by requiring clear rules from operators, disclosure of odds and bonus terms, and long recordkeeping requirements.

Opponents' View#

• One concern is that the bill gives the Attorney General broad gatekeeping power over which State programs are approved, with limited detail on review standards or how subjective terms (for example, “contrary to the public interest”) will be applied.
• The bill does not include a public cost estimate. This raises questions about how expensive it will be for the federal government, States, and operators to implement and enforce the new requirements.
• The recordkeeping and real-time data sharing requirements could raise privacy and data-security questions, especially around transmission of personal data to sports organizations and regulators.
• Some provisions are complex or leave details unspecified, such as the exact rules for defining “material, nonpublic information,” the criteria for approved data sources, and procedures for the national self-exclusion list. These unclear points could slow implementation or create uneven enforcement.
• The criminal penalties and per-violation fines are large and could be seen as severe, especially if applied to technical or reporting errors rather than deliberate fraud.