Senator Introduces Bill to Regulate America’s Exploding Prediction Market Industry

Clear Facts

• Prediction market transaction volume exploded from $51 billion in 2024 to over $60 billion in just the first three and a half months of 2025, with some estimates projecting growth to $1 trillion
• Senator Dave McCormick introduced the bipartisan Prediction Market Act to establish regulatory framework protecting investors while keeping the industry in America
• The legislation prohibits public officials from profiting on prediction market contracts related to events they can influence, addressing ethical concerns

A rapidly growing financial innovation is demanding Washington’s attention. Prediction markets have exploded in popularity, and lawmakers are finally moving to establish rules that protect American investors while ensuring this trillion-dollar industry stays on our shores.

The numbers tell a remarkable story. Last year saw approximately $51 billion in total transaction volume on prediction markets. This year has already exceeded $60 billion in just three and a half months, including over 192 million unique transactions and more than 865,000 active users in March alone. Industry analysts project this market could balloon to $1 trillion within the next several years.

Senator Dave McCormick has introduced legislation to bring order to this booming sector. Writing about his new bill, the Pennsylvania Republican explained the stakes for American competitiveness and consumer protection.

“Given this massive influx of retail participation in these markets, we need to update the regulatory framework to protect investors, strengthen market integrity, and keep America at the forefront of this latest financial innovation,” McCormick stated.

Prediction markets allow investors to buy and sell contracts tied to whether specific events will occur. These contracts have proven to be powerful forecasting tools, often outperforming traditional polls and expert predictions. Through collective knowledge, these markets forecast future events, enabling businesses and individuals—from small businesses managing inventory to investors hedging portfolios—to protect themselves against uncertainty.

The real-time price data from prediction markets offers valuable insights into market expectations. Major news organizations have increasingly incorporated this data into their coverage, recognizing its newsworthy value.

“Bottom line: Prediction markets are here to stay,” McCormick wrote. “Consumers, investors, companies, and financial institutions are increasingly seeing their value. Congress should too, but we must also guarantee greater clarity and stronger protections for everyday Americans.”

The Prediction Market Act, introduced this week with bipartisan support from Senator Kirsten Gillibrand, establishes a regulatory framework built on three core principles.

First, the legislation strengthens consumer protection. While prediction markets currently operate under Commodity Futures Trading Commission oversight, the existing regulatory regime wasn’t designed with everyday retail participants in mind. The bill addresses this gap by heightening scrutiny on available event contracts, increasing investor protection standards on exchanges, and boosting retail consumer protections.

Second, the bill sets clear ethical guardrails to maintain public trust. It prohibits public officials from owning any event contract related to matters they can influence, ensuring government officials cannot personally profit from their positions of power.

Third, the legislation aims to keep America at the forefront of this fast-growing industry. McCormick drew on his business experience to emphasize the importance of regulatory clarity.

“I know from my time running businesses that nothing stifles innovation like unclear and uncertain regulations,” he explained. “Absent clarity, we risk pushing this industry – and all its attendant benefits – overseas.”

The senator acknowledged ongoing disagreements over certain areas, particularly regarding the treatment of sports-related prediction markets. However, he emphasized that the costs of regulatory inaction are clear: increased risks to consumers and a growing likelihood that this emerging industry will relocate offshore.

“So the real question is, will the United States lead the way and develop strong, safe, and fair markets?” McCormick asked. “Our legislation lays the foundation for that future.”

The bipartisan nature of the bill signals potential for movement in Congress. With billions of dollars and hundreds of thousands of American participants already engaged in these markets, lawmakers face pressure to act before regulatory uncertainty drives innovation and economic activity to foreign jurisdictions.

The legislation represents a pragmatic approach to emerging technology—neither banning innovation nor allowing it to operate in a regulatory vacuum. Instead, it seeks to establish common-sense rules that protect American consumers while maintaining the country’s competitive edge in financial innovation.

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