Prediction Markets Security and Integrity Act of 2026

Bill Number

S. 4060

Origin Chamber

Senate

Congress

119th Congress, Session 2

Policy Area

Health

Status

Introduced

Latest Action

2026-03-11: Read twice and referred to the Committee on the Judiciary.

Last Updated

2026-03-30T15:16:07Z

AI-Generated Summary

Prediction Markets Security and Integrity Act of 2026 (S. 4060)

Purpose

The legislation aims to establish national safeguards for online prediction markets—platforms where users bet on outcomes of events like sports or elections—by treating them similarly to gambling. It seeks to prevent abuse, fraud, and underage participation; protect consumers from predatory practices; and shift primary regulatory authority back to states while providing federal oversight to ensure consistency and integrity.

Key Provisions

• Definitions: Clarifies terms such as "online prediction market" (platforms for betting on non-financial events), "wager" (staking something of value on an event outcome, including types like parlays or proposition bets), "gambling disorder" (addictive behaviors recognized by medical standards), and "state wagering program" (state-approved systems for regulating these markets).

• Fraud and Manipulation Prevention (Section 4):
• Prohibits using insider or nonpublic information for personal gain in betting.
• Bans conflicts of interest, manipulative practices that alter event outcomes, and listings vulnerable to fraud (e.g., bets on wars, military actions, deaths, or illegal activities).
• Requires platforms to clearly define wager resolution rules, remove violating listings, and enforce internal rules against prohibited activities.
• The Attorney General must issue implementing rules within 180 days, including defining "material, nonpublic information."

• State Wagering Programs (Section 6):
• States must apply to the Attorney General for approval to create and oversee programs regulating online prediction markets.
• Approvals last 3 years, with renewal options; denials or revocations occur if standards aren't met.
• States must notify the Attorney General of material changes and can form interstate compacts (agreements between states or with Indian Tribes) for cross-border betting, subject to approval.

• Standards for State Programs (Section 7): States must enforce comprehensive rules, including:
• Regulatory Structure: Designate a state entity to oversee markets and enforce laws.
• Permissible Wagering: Limit betting to in-state users (or compact participants); verify locations; approve wagers only if outcomes are verifiable and independent; ban bets on amateur sports, intercollegiate events, in-progress sports, reload bonuses (incentives for low-balance deposits), tiered rewards over $5, or VIP programs tied to gambling volume.
• Contest Integrity: Allow event organizers (e.g., sports leagues) to request betting restrictions if needed to prevent outcome manipulation; states must review and notify platforms promptly.
• Prohibited Participants: No betting by those under 21, on self-exclusion lists, involved in sports (e.g., athletes, coaches), or convicted of certain federal crimes.
• Data and Consumer Protections: Use only approved, reliable data sources for results; offer self-exclusion (state and national lists); ban restrictive withdrawal conditions; require clear disclosures on odds, bonuses, and rules; fund gambling treatment and education; maintain financial reserves; limit deposits (e.g., no credit cards, max 5 per day); conduct affordability checks for large bets (e.g., verifying against income or lending standards); prohibit AI for targeting users or creating bets.
• Advertising Restrictions: Ads must identify the platform and provide addiction resources; cannot target minors, problem gamblers, or ineligible users; limited to 10 p.m.–8 a.m. and banned during live sports broadcasts; no promotions like "bonus bets."
• Licensing and Oversight: Platforms and key personnel must pass background checks; bans those with gambling-related convictions or ties to illegal operations; annual employee checks; 6-year recordkeeping; real-time data sharing; suspicious transaction reporting to states and sports organizations; monitoring, audits, and cooperation with investigations; internal control systems.

• National Self-Exclusion List (Section 8): Adds a provision to the Public Health Service Act for a federal list, managed by the Secretary of Health and Human Services in cooperation with states, allowing individuals to voluntarily restrict or ban themselves from betting nationwide.

• Underage Prevention (Section 9): Platforms must verify user age (21+), identity, and location; existing accounts must be re-verified; no advertising or branding targeting minors.

• Enforcement (Section 10):
• Attorney General can seek injunctions, fines ($50,000+ per violation), or imprisonment (up to 2 years).
• State attorneys general can sue on behalf of residents, with notice to the federal government.
• Federal actions take precedence during pendency.

• Preservation of State Authority (Section 11): Amends the Commodity Exchange Act to ban prediction markets from listing "event contracts" (bets on occurrences). Does not preempt stricter state or tribal laws, including outright bans.

• Severability (Section 12): Invalid provisions do not affect the rest of the Act.

Significant Changes to Existing Law

• Reclassification and Oversight Shift: Treats online prediction markets as gambling (similar to sports betting), moving regulation from potential federal commodity oversight (e.g., under the Commodity Futures Trading Commission) to state-led programs with Attorney General approval, reversing any prior federal preemption.
• Commodity Exchange Act Amendment: Explicitly prohibits event contracts on these platforms, closing loopholes that might have allowed them to operate as financial instruments.
• New Federal Mandates: Introduces uniform national standards for consumer protections, self-exclusion, and enforcement, while affirming states' historical role in gambling regulation without overriding local laws.
• Enhanced Prohibitions: Expands bans on certain bets (e.g., minors, amateurs) and practices (e.g., AI targeting, predatory bonuses), building on existing gambling laws like the Wire Act or Unlawful Internet Gambling Enforcement Act.

Potential Impacts

• On Government Agencies: The Attorney General gains a central role in approving and monitoring state programs, potentially increasing federal workload but empowering states with regulatory tools. State agencies must build or expand oversight capacity, including data systems and enforcement strategies. Sports organizations and the Department of Justice benefit from mandatory reporting of suspicious activities.

• On Citizens: Provides stronger protections against addiction (e.g., self-exclusion, deposit limits, treatment funding) and fraud, but restricts access for those under 21 and limits betting options. Could reduce exposure to unregulated foreign platforms, improving safety for adult users while potentially increasing state tax revenues for public health.

• On International Relations: May deter foreign operators from targeting U.S. users by enforcing stricter compliance and penalties, potentially straining relations with countries hosting unregulated platforms. Interstate compacts could foster cooperation but require federal approval, indirectly influencing cross-border data and enforcement.

Main Stakeholders Affected

• States and Indian Tribes: Gain authority to regulate or ban markets, form compacts, and enforce consumer protections; must invest in regulatory infrastructure.
• Online Prediction Market Operators: Face licensing, compliance costs (e.g., verification, reporting), and operational limits (e.g., no predatory features), but can operate legally in approved states.
• Consumers and Bettors: Benefit from safeguards against exploitation and addiction; minors and vulnerable individuals (e.g., those with gambling disorders) are protected, though some may face barriers to participation.
• Sports Organizations and Leagues: Can request betting restrictions to protect event integrity and receive reports on suspicious wagers involving their events.
• Federal Agencies: Attorney General and Health and Human Services oversee approvals, lists, and enforcement; law enforcement gains tools for investigations.

Notable Legal, Constitutional, or Political Implications

• Legal: Clarifies that prediction markets fall under gambling laws, reducing ambiguity and litigation risks; strengthens enforcement against illegal foreign operations while allowing states flexibility. The severability clause ensures robustness against court challenges.

• Constitutional: Respects federalism by deferring to state authority (10th Amendment) while using federal oversight to ensure uniform minimum standards, avoiding overreach. No direct impact on free speech or commerce clause issues, but advertising bans could face scrutiny if seen as overly restrictive.

• Political: Balances consumer protection with industry growth, appealing to public health advocates and states seeking revenue. Could spark debates on federal vs. state power in emerging tech like prediction markets, potentially influencing future gambling or fintech regulations. Introduced by Sens. Blumenthal and Kim, it reflects bipartisan concerns over unregulated betting post-2018 sports gambling legalization.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Blumenthal, Richard [D-CT]

Cosponsors (1)

Sen. Kim, Andy [D-NJ]

Recent Actions

• 2026-03-11: Read twice and referred to the Committee on the Judiciary.
• 2026-03-11: Introduced in Senate

Bill Versions

• Prediction Markets Security and Integrity Act of 2026 — issued 2026-03-11 — PDF (51 pages)