Democracy in America today is fragile and on a precipice, with more and more Americans questioning the integrity and validity of elections. The shocking Jan. 6 attack on the Capitol is only the latest and most extreme example of this, but there are other much less high-profile examples across the country that are steadily eroding Americans’ confidence in their elections and democracy itself.
In this shaky political moment, the last thing our country needs is for democracy to be undermined further by allowing gambling on elections. But that is what a private, profit-maximizing company is proposing.
Gambling on elections would create very powerful incentives for bad actors, or even those just looking to make a quick buck, to interfere with our elections and try to sway voters outside of the democratic process. For example, it is easy to imagine how AI or social media might be manipulated to quickly circulate false and misleading information and “deepfakes” within hours or days of an election that could move enough votes to change the election’s results.
Legalizing gambling on U.S. elections would be a dramatic policy change with potentially grave national implications. But the private company is trying to do this in a way that would attract as little attention or debate as possible by submitting a proposal to the Commodity Futures and Trading Commission (CFTC), the smallest financial regulatory agency that is chronically underfunded and understaffed. Moreover, the CFTC has nothing to do with gaming, gambling or elections and has no experience, expertise or mandate to legalize, authorize or police gambling on elections across the U.S. (or to overrule the many state laws carefully regulating gaming and gambling).
Nevertheless, this company is seeking CFTC approval to allow traders to bet on U.S. elections via so-called “event contracts,” which the company claims should be regulated by the CFTC. Regardless of how it is packaged, pitched or processed, this is gambling pure and simple.
While the pending proposal is limited to betting on the partisan control of Congress, if approved, there’s no doubt that traders will quickly be able to wager on the outcome of all sorts of elections, from local to presidential.
Opposition to gambling on elections is bipartisan and nonpartisan. For example, former Republican CFTC Commissioner Jill Sommers opposed a prior proposal by the company, noting that “When we think about what happened in 2020, do we really want another excuse for the American people to question the integrity of our elections?” Nonpartisan advocacy organization Better Markets, where I am president and CEO, also opposed this as violating the Commodities Exchange Act and state and federal laws as well as sound public policy.
Unleashing this gambling under the purview of the CFTC would also disrupt the commodities markets and distract the CFTC from its vital mission of regulating and policing the commodities markets to ensure that commodities in the right amounts, at the right times, and at reasonable prices are available to the American people. From their cereal at breakfast to the bread in their lunch sandwiches and the gas in their cars and trucks to get to school, work and the grocery store. These markets are not intended to serve as casinos for gamblers, and the CFTC isn’t meant to be gambling officials or elections cops.
Democracy and elections are foundational principles for our country and are not appropriate subjects for gambling and betting. Given the use and abuse of social media in the gambling space and the A.I. in the political space, allowing gambling on U.S. elections will invite if not incentivize more interference, abuse and misconduct as gamblers seek to effect political outcomes to maximize their winnings.
In the current environment, where many Americans already question the integrity of U.S. elections, this would be adding fuel to the fire at the worst possible time. If this proposal is approved, it is inevitable that elections at every level — federal, state and local — will become fodder for casinos and wagering.
Even relatively small spending on negative attack ads can help swing a close race, local elections and primaries with low turnout, especially if done in the last few days before an election, when there is little if any time for a meaningful response. Imagine what damage an AI deepfake video, supercharged by viral social media, could do if a gambler wanted to try to increase the odds of winning his or her bet in the days before an election. The truth will not catch up to the lie before the votes — and die — are cast.
If Jan. 6 taught us anything, it is that democratic institutions and practices like elections are precarious and need to be defended and protected. Profit-maximizing companies should not be allowed to undermine those elections and endanger our democracy. The CFTC should reject the proposal and elected officials in Washington and throughout the country should tell the CFTC not to gamble on our democracy.
Dennis M. Kelleher is president and CEO of the nonprofit Better Markets.