Don Davis Bill Would Fine Federal Candidates for Trading on Their Own Races

Rep. Don Davis of North Carolina on Monday introduced a bill that would bar federal candidates from trading prediction-market contracts on their own elections. The No Betting on Your Own Race Act would make each trade a civil offense carrying a fine of $10,000, or three times any profit, whichever is greater, according to the press release from Davis's office.

The ban reaches beyond the candidate. It covers a spouse or dependent child and the candidate's authorized campaign committee, and it applies to buying, selling, acquiring, disposing of or simply holding contracts tied to the candidate's election, the release says.

"We don't want our athletes to bet on their games. A candidate running for federal elected office should be treated exactly the same and should not be allowed to trade on their own election," Davis, a Democrat, said in the statement. He said the bill aims to stop market interference and insider trading and to keep candidates and their families from cashing in.

The prohibition is drawn widely. Covered contracts include any market whose payout turns on the candidate's primary, caucus, convention or nomination contest, on the general election, on whether the person enters or stays in a race, or on vote share, margin or placement. Trading through someone else counts too: directing or knowingly funding another person's position would violate the ban, Unchained reported.

Decrypt reported that indirect exposure is spelled out in detail, including inducing someone else to trade, holding a beneficial interest however titled, or funding another person's position while knowing what it is for. The bill's definition of a political event contract runs further still, taking in caucuses, nominations, control of Congress and any other political or governmental event the CFTC designates by rule.

Much of the text shields the exchanges rather than punishing them. Platforms, brokers and their staff would face no penalty under the new section, and would be protected from liability for good-faith steps such as restricting, suspending or closing an account, or for canceling, voiding or unwinding a position, according to that coverage. They could report suspected violations to the CFTC, the attorney general or the Federal Election Commission without liability and without telling the person reported.

To make screening possible, the FEC would have to publish a free machine-readable list of every federal candidate, updated at least weekly, with each person's name, commission identifier, office sought and the dates they entered and left the race. Election officials would also have to notify candidates of the rules when they file. There is a grace period of sorts: holding or selling a position that becomes covered when someone declares a candidacy is not an offense during whatever minimum divestment window the platform allows, Unchained noted.

The bill arrives with a local backstory. Davis represents North Carolina's 1st District, and his Republican opponent in November, Laurie Buckhout, was suspended from Kalshi for three years and fined $2,589.96 in August after the exchange found she had bought less than $1,000 worth of contracts on her own candidacy. Kalshi treats candidates as decision makers barred from trading outcomes they can influence, according to that account.

"I bet on myself. Literally. It was a dumb mistake, and as soon as I learned there was an issue, I worked to make it right," Buckhout told the local station WITN at the time. Davis told the station the news that his opponent "was caught, fined, and slapped with a three-year ban for trading on insider information is a disqualifying breach of public trust." The press release announcing the bill does not mention Buckhout.

Davis filed the bill during a pro forma session of the House, and the chamber's next votes are expected on Nov. 9, six days after the midterm elections, Unchained added. The timing means the measure cannot become law before voters go to the polls.

Exchanges have largely policed the issue themselves so far. Kalshi fined multiple congressional candidates earlier this year over bets on their own races and has suspended candidates since, Decrypt wrote. In April it suspended three other House candidates, in Virginia, Minnesota and Texas, for five years each, and it began screening political candidates out of their own election markets in March. The CFTC is separately investigating former Rep. Adam Kinzinger over trades tied to his own presidential pardon, and agency staff last month warned exchanges that contracts settling on the conduct of named individuals should be presumed open to manipulation.