S. 4469

112 S4469 IS: Prediction Market Act of 2026
 U.S. Senate
 2026-04-30
 text/xml
 EN
 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
 II  119th CONGRESS  2d Session  S. 4469  IN THE SENATE OF THE UNITED STATES   April 30, 2026   Mr. McCormick  (for himself and  Mrs. Gillibrand ) introduced the following bill; which was read twice and referred to the  Committee on Agriculture, Nutrition, and Forestry    A BILL
To amend the Commodity Exchange Act to modify provisions relating to event contracts, and for other purposes.
1.
Short title
This Act may be cited as the   Prediction Market Act of 2026  .
2.
Special rules relating to event contracts
Section 5c of the Commodity Exchange Act ( 7 U.S.C. 7a–2 ) is amended—
(1)
in subsection (c)(5)(C)—
(A)
in the subparagraph heading, by striking
event contracts and  ;
(B)
by striking clauses (i), (ii), and (iv);
(C)
in clause (iii), by striking the clause designation and heading and all that follows through  In connection  in subclause (I) and inserting the following:
(i)
In general
In connection
 ;
(D)
by redesignating subclause (II) as clause (ii) and indenting appropriately; and
(E)
in clause (ii) (as so redesignated), by redesignating items (aa) and (bb) as subclauses (I) and (II), respectively, and indenting appropriately; and
(2)
by inserting after subsection (c) the following:
(d)
Special rules relating to event contracts
(1)
Definitions
In this subsection:
(A)
Contingency
The term  contingency  means an event or circumstance that may happen, but is not certain to occur, including the outcome of another event or circumstance.
(B)
Event contract
The term  event contract  means a contract for the sale of a commodity for future delivery, option on such a contract, or swap based on one or more excluded commodities that is—
(i)
based upon an occurrence, extent of an occurrence, or contingency (other than a change in the price, rate, value, or levels of a commodity described in section 1a(19)(i)); and
(ii)
listed by a designated contract market or swap execution facility.
(C)
Occurrence
The term  occurrence  means something that happens, such as an event, including the outcome of another event.
(2)
Review or approval of event contracts
(A)
In general
In connection with the listing of event contracts by a designated contract market or swap execution facility, the Commission, on a case-by-case basis, may determine that an event contract is contrary to the public interest if the event contract is based on an occurrence, extent of an occurrence, or contingency involving—
(i)
activity that is unlawful under any Federal or State law;
(ii)
terrorism;
(iii)
assassination;
(iv)
war;
(v)
violence;
(vi)
gaming; or
(vii)
other similar activity determined by the Commission to be contrary to the public interest.
(B)
Prohibition
No event contract determined by the Commission to be contrary to the public interest under subparagraph (A) may be listed or made available for clearing or trading on or through a registered entity.
(C)
Public interest criteria
(i)
Criteria
The Commission shall promulgate such rules and regulations as the Commission determines appropriate to specify the criteria for determining that event contracts based on the activities described in clauses (i) through (vii) of subparagraph (A) are contrary to the public interest.
(ii)
Public interest
In the rules and regulations promulgated under clause (i), the Commission shall provide that an event contract is likely to be contrary to the public interest if the event contract materially encourages violence or similar unlawful activity.
(iii)
Public comment
In promulgating rules and regulations under clause (i), the Commission shall provide not less than a 60-day public comment period.
(D)
Enhanced certification
(i)
Format of submissions
The Commission shall prescribe by rule or regulation standardized requirements, as determined by the Commission, in addition to the requirements of subsection (c), for the format of written certifications of designated contract markets and swap execution facilities for new event contracts pursuant to subsection (c)(1) and for voluntary requests for prior approval for new event contracts pursuant to subsection (c)(4).
(ii)
Disclosure requirements
The Commission shall prescribe by rule or regulation disclosure requirements relating to the material terms and conditions of event contracts that are reasonably designed to promote retail customer readability.
(iii)
Financial penalty
(I)
In general
The Commission may prescribe by rule or regulation a financial penalty for a violation of clause (i).
(II)
Considerations
In determining the amount of a financial penalty assessed under subclause (I), the Commission shall consider—
(aa)
the gravity of the violation; and
(bb)
similar previous violations committed by the designated contract market or swap execution facility.
(III)
Appeals
If the Commission prescribes a financial penalty under subclause (I), the Commission shall establish a procedure for appealing such penalties, including in Federal courts.
(3)
Communications with the public
(A)
In general
In connection with the offer of an event contract to a person that is not an eligible contract participant, a derivatives clearing organization shall not use any promotional material that—
(i)
is likely to deceive the public;
(ii)
contains any material misstatement or omission that makes the promotional material misleading;
(iii)
mentions the possibility of profit unless accompanied by an equally prominent discussion of the risk of loss;
(iv)
includes any reference to actual past trading profits without mentioning that past results are not necessarily indicative of future results;
(v)
includes any specific numerical or statistical information about the past performance of any actual account, unless permitted by the Commission by rule or regulation; or
(vi)
includes a testimonial that—
(I)
is not representative of all reasonably comparable investors;
(II)
does not prominently state that the testimonial is not indicative of future performance or success; and
(III)
if applicable, does not prominently state that it is a paid testimonial.
(B)
Rulemaking
The Commission shall promulgate such rules or regulations as the Commission determines to be appropriate to carry out subparagraph (A), consistent with applicable standards for futures commission merchants, including—
(i)
relating to records to be made available for examination by the Commission; and
(ii)
applicable disciplinary actions or penalties for noncompliance with this paragraph.
(4)
Know your customer application
(A)
Anti-money laundering compliance program
In connection with the offer of an event contract to a person that is not an eligible contract participant, a derivatives clearing organization shall have an anti-money laundering compliance program in place in accordance with section 5318(h) of title 31, United States Code, which shall include—
(i)
internal policies, procedures, and controls reasonably designed to achieve compliance with subchapter II of  chapter 53  of title 31, United States Code, and chapter 2 of title I of  Public Law 91–508  ( 12 U.S.C. 1951 et seq. ) (commonly known as the  Bank Secrecy Act ) (including regulations promulgated under that subchapter and chapter);
(ii)
appointment of one or more individuals responsible for implementing and monitoring the program's day-to-day operations;
(iii)
an ongoing training program;
(iv)
independent testing;
(v)
appropriate risk-based procedures for conducting customer due diligence, including—
(I)
understanding the nature and the purpose of developing a customer risk profile; and
(II)
conducting ongoing monitoring to detect and report suspicious transactions and on a risk basis to maintain and update customer information, including identifying and verifying beneficial owners; and
(vi)
appropriate procedures to verify that individual customers have attained the age of 18 years.
(B)
Rulemaking
The Commission shall promulgate such rules or regulations, with consideration of the application of the applicable core principles described in this Act, as the Commission determines to be appropriate to carry out subparagraph (A), including—
(i)
relating to records to be made available for examination by the Commission; and
(ii)
applicable disciplinary actions or penalties for noncompliance with this paragraph.
(5)
Funds
(A)
Segregation required
In connection with the offer of an event contract to a person that is not an eligible contract participant and accessing a derivatives clearing organization as a direct clearing member, the Commission shall promulgate such rules or regulations as the Commission determines to be appropriate regarding the segregation of member funds from the derivatives clearing organization’s own funds.
(B)
Customer communication
A futures commission merchant, designated contract market, or swap execution facility shall disclose to event contract customers the relevant risks of loss or potential delay in access to the funds and assets.
(C)
Default fund
For default management purposes, a derivatives clearing organization shall treat funds held for members and customers solely trading fully collateralized contracts separately from funds held for members and customers trading leveraged contracts.
(D)
Rulemaking
The Commission shall promulgate such rules or regulations as the Commission determines to be appropriate to carry out subparagraphs (B) and (C).
(6)
Advisory Council on Consumer Protection
(A)
Establishment
Not later than 90 days after the date of enactment of the  Prediction Market Act of 2026 , the Chairman of the Commission shall establish the Advisory Council on Consumer Protection (referred to in this paragraph as the  Advisory Council ).
(B)
Chair and Vice-Chair
The Chairman of the Commission shall appoint a Chair and Vice-Chair of the Advisory Council from among the members of the Advisory Council.
(C)
Mission
The mission of the Advisory Council shall be—
(i)
to provide a forum for regular communication and analysis related to retail investor participation in derivatives markets;
(ii)
to encourage discussions relating to consumer protection regarding event contract markets and related markets; and
(iii)
to develop recommendations to ensure that markets promote customer protection, market integrity, and responsible participation.
(D)
Membership
The Advisory Council shall be composed of 15 members, who shall be appointed by the Chairman of the Commission and shall include—
(i)
the Retail Advocate described in paragraph (7)(C);
(ii)
not fewer than 3 State attorneys general;
(iii)
subject matter experts in behavioral science and health, financial risk, and consumer finance; and
(iv)
representatives of—
(I)
the Office of Customer Education and Outreach;
(II)
the Department of Justice;
(III)
State and local law enforcement;
(IV)
State and local regulatory agencies, as appropriate;
(V)
market operators; and
(VI)
market participants.
(E)
Duties
The duties of the Advisory Council shall include—
(i)
meeting not less frequently than once every 120 days, in a manner to be determined by the Chairman of the Commission, to provide independent advice and recommendations to the Commission and Congress;
(ii)
identifying policies to promote retail customer protection and specific gaps in investor protections for retail customers;
(iii)
assessing the viability of a self-exclusion program, which would allow a customer to be voluntarily prohibited from entering into an event contract;
(iv)
assessing the viability of a program to implement voluntary deposit and trade limits;
(v)
reviewing the considerations of the retail customer profile, including age, income, and behavioral vulnerabilities, when assessing investor protection;
(vi)
studying behavioral prompts and marketing features designed to engage customers in connection with the offer of an event contract;
(vii)
reviewing the effectiveness of existing legal or regulatory recommendations to improve customer protections in connection with the offer of an event contract; and
(viii)
evaluating the design, accessibility, and use of mobile applications, smartphones, and other personal electronic devices in connection with the offer of event contracts.
(F)
Reports
The Advisory Council shall—
(i)
not later than 180 days after the date of enactment of the  Prediction Market Act of 2026 , submit to Congress an initial report with analysis and recommendations regarding matters studied under subparagraph (E), which shall include consumer protection, market integrity, investor profile, marketing features, and other related topics; and
(ii)
twice each year thereafter, submit to Congress a report containing findings, and recommendations for legislation, regulations, and oversight, relating to the matters studied under subparagraph (E).
(G)
Review by Commission
The Commission shall—
(i)
review the findings and recommendations of the Advisory Council; and
(ii)
make publicly available a report containing an assessment by the Commission of any findings and recommendations of the Advisory Council.
(7)
Office of the Retail Advocate
(A)
Definitions
In this paragraph:
(i)
Chairman
The term  Chairman  means the Chairman of the Commission.
(ii)
Office
The term  Office  means the Office of the Retail Advocate established by subparagraph (B).
(iii)
Retail participant
The term  retail participant  means a person that—
(I)
is not an eligible contract participant; and
(II)
is participating in a designated contract market.
(B)
Office established
There is established within the Commission the Office of the Retail Advocate.
(C)
Retail Advocate
(i)
In general
The Retail Advocate shall—
(I)
report directly to the Commission; and
(II)
be appointed by the Chairman from among individuals with experience in advocating for the interests of retail participants.
(ii)
Compensation
The annual rate of pay for the Retail Advocate shall be equal to the highest rate of annual pay for other senior executives who report to the Chairman.
(D)
Functions of the Retail Advocate
The Retail Advocate shall—
(i)
assist retail participants in resolving significant problems relating to transactions;
(ii)
analyze the potential impact on retail participants of proposed regulations of the Commission;
(iii)
to the extent practicable, propose to the Commission changes in the regulations or orders of the Commission that may be appropriate to promote the interests of retail participants;
(iv)
conduct research to identify and understand issues that affect retail participants; and
(v)
operate with and provide assistance to the Office of Customer Education and Outreach to conduct initiatives and outreach for retail participants.
(E)
Access to documents
(i)
In general
At the discretion of the Chairman, the Retail Advocate shall have full access to the documents of the Commission as necessary to carry out the functions of the Office.
(ii)
Effect
Nothing in this subparagraph authorizes the Retail Advocate, or staff of the Office, to have access to, or to release publicly or internally within the Commission, proprietary or sensitive market data, including data and information that would separately disclose the business transactions or market positions of any person and trade secrets or names of customers, consistent with section 8.
(iii)
Policies and procedures
The Office shall establish and make public on the website of the Commission policies and procedures to safeguard the confidentiality of any documents the Retail Advocate or staff of the Office has access to.
(F)
Annual report on objectives and activities
(i)
In general
Not later than September 30 of each year, the Retail Advocate shall submit to Congress a report describing the objectives and activities of the Retail Advocate for the following fiscal year.
(ii)
Contents
Each report required under clause (i) shall include—
(I)
appropriate statistical information and full and substantive analysis;
(II)
information on steps that the Retail Advocate has taken during the reporting period to improve—
(aa)
services to and communication with retail participants; and
(bb)
the responsiveness of the Commission;
(III)
a summary of the most serious problems reported to the Office or the Commission by retail participants during the reporting period;
(IV)
an inventory of the items described in subclause (III) that includes—
(aa)
identification of any action taken by the Commission and the result of that action;
(bb)
the period of time that each item has remained on the inventory; and
(cc)
for items with respect to which no action has been taken, the reasons for inaction, and an identification of any official who is responsible for the action;
(V)
recommendations for such administrative and legislative actions as may be appropriate to resolve problems encountered by retail participants; and
(VI)
any other information, as determined appropriate by the Retail Advocate.
(iii)
Confidentiality
No report required under clause (i) may contain confidential information.
(G)
Ombudsman
(i)
Appointment
Not later than 180 days after the date on which the first Retail Advocate is appointed under subparagraph (C)(i)(II), the Retail Advocate shall appoint an Ombudsman, who shall report directly to the Retail Advocate.
(ii)
Duties
The Ombudsman appointed under clause (i) shall—
(I)
act as a liaison between the Commission and any retail participant in resolving problems the retail participant may have with the Commission;
(II)
review and make recommendations regarding policies and procedures to encourage persons to present questions to the Retail Advocate regarding compliance with this Act; and
(III)
establish safeguards to maintain the confidentiality of communications between the persons described in subclause (II) and the Ombudsman.
(iii)
Limitation
(I)
Personnel
In carrying out the duties of the Ombudsman under clause (ii), the Ombudsman shall utilize personnel of the Commission, to the extent practicable.
(II)
Effect
Nothing in this clause shall be construed as replacing, altering, or diminishing the activities of any ombudsman or similar office of any other agency.
(iv)
Report on activities
(I)
In general
The Ombudsman shall submit to the Retail Advocate an annual report that describes the activities and evaluates the effectiveness of the Ombudsman during the preceding 1-year period.
(II)
Submission
The Retail Advocate shall include the report required under subclause (I) in the reports required to be submitted by the Retail Advocate under subparagraph (F).
(8)
Rule of construction
Nothing in this subsection may be construed to affect—
(A)
the ability of a State to investigate and bring enforcement actions under this Act, including pursuant to section 6d; or
(B)
the jurisdiction of the Commission described in section 2(a)(1)(A).
 .
3.
Insider trading and manipulation
(a)
Prohibition on Members of Congress trading event contracts
Section 4c(a)(3) of the Commodity Exchange Act ( 7 U.S.C. 6c(a)(3) ) is amended—
(1)
by striking  under section 2 of the STOCK Act)  each place it appears and inserting  in section 2 of the STOCK Act ( 5 U.S.C. 13101  note;  Public Law 112–105 )) ;
(2)
by redesignating subparagraphs (A) through (C) as clauses (i) through (iii), respectively, and indenting appropriately;
(3)
in the matter preceding clause (i) (as so redesignated), by striking  It shall  and inserting the following:
(A)
In general
It shall
 ; and
(4)
by adding at the end the following:
(B)
Prohibition on Members of Congress and executive branch officials trading event contracts
It shall be unlawful for any Member of Congress (as defined in section 2 of the STOCK Act ( 5 U.S.C. 13101  note;  Public Law 112–105 )), the President, the Vice President, or any officer or employee described in sections 5312 through 5316 of title 5, United States Code, to enter into an event contract (as defined in section 5c(d)(1)).
 .
(b)
Rules or regulations
The Commodity Futures Trading Commission (referred to in this section as the  Commission ) shall promulgate such rules or regulations as the Commission determines to be appropriate to carry out the amendments made by subsection (a).
(c)
Review of insider trading
The Commission shall—
(1)
determine whether the rules and regulations of the Commission relating to insider trading should be revised or updated to require designated contract markets, swap execution facilities, and futures commission merchants to establish enhanced measures reasonably designed to detect and deter insider trading involving event contracts (as defined in subsection (d)(1) of section 5c of the Commodity Exchange Act ( 7 U.S.C. 7a–2 )); and
(2)
implement any relevant revisions or updates resulting from the determination under paragraph (1).
(d)
Financial literacy
The Commission shall conduct, through the Office of Customer Education and Outreach, financial literacy and customer education activities specific to retail investor activity related to event contracts (as defined in subsection (d)(1) of section 5c of the Commodity Exchange Act ( 7 U.S.C. 7a–2 )).
4.
Innovation Advisory Committee
Section 2(a) of the Commodity Exchange Act ( 7 U.S.C. 2(a) ) is amended by adding at the end the following:
(16)
Innovation Advisory Committee
(A)
In general
There is established the Innovation Advisory Committee (referred to in this paragraph as the  Committee )—
(i)
to facilitate discussion and communication on matters of concern to exchanges, firms, end-users, and regulators regarding innovation in the derivatives and commodity market and the regulation of those markets by the Commission; and
(ii)
to advise the Commission on the matters described in clause (i).
(B)
Members
The Commission shall appoint members to the Committee with a wide diversity of opinions relating to the matters described in subparagraph (A)(i) and who represent a broad spectrum of interests, including—
(i)
market makers;
(ii)
derivative end-users;
(iii)
futures commission merchants; and
(iv)
market operators.
(C)
Activities
The Committee shall—
(i)
conduct public meetings at such intervals as are necessary to carry out the functions of the Committee, but not less frequently than 2 times per year;
(ii)
submit reports and recommendations to the Commission; and
(iii)
otherwise facilitate discussion and communication on the matters described in subparagraph (A)(i).
(D)
Terms
Members of the Committee shall be appointed to 3-year terms, but may be removed for cause by vote of the Commission.
(E)
Reimbursements
A member of the Committee shall be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of  chapter 57  of title 5, United States Code, while away from their homes or regular places of business in the performance of services for the Committee.
(F)
Chapter 10 of title 5, United States Code
The Committee shall not be subject to  chapter 10  of title 5, United States Code.
(G)
Termination
The Commission may terminate the Committee if the Commission determines that such termination is appropriate.
 .
5.
Studies
(a)
Definitions
In this section:
(1)
Commission
The term  Commission  means the Commodity Futures Trading Commission.
(2)
Event contract
The term  event contract  has the meaning given the term in subsection (d)(1) of section 5c of the Commodity Exchange Act ( 7 U.S.C. 7a–2 ).
(b)
Study on event contracts
(1)
Study
The Commission shall conduct a study on event contracts that includes—
(A)
the size and structure of event contract markets;
(B)
the growth of event contract listings by contract markets designated under the Commodity Exchange Act ( 7 U.S.C. 1 et seq. ) and swap execution facilities (as defined in section 1a of that Act ( 7 U.S.C. 1a ));
(C)
the characteristics of the market structure and liquidity formation in event contracts related to—
(i)
weather;
(ii)
technology;
(iii)
science;
(iv)
economics;
(v)
government data;
(vi)
cultural events;
(vii)
political events;
(viii)
sports; or
(ix)
a particular word or phrase to be potentially mentioned by one or more persons in an oral or written statement, speech, briefing, address, or other form of communication;
(D)
the types of trader or intermediary conduct unique to event contracts and markets that should be closely monitored or given special consideration; and
(E)
the provisions of the Commodity Exchange Act ( 7 U.S.C. 1 et seq. ) that prohibit fraud, manipulation, disruptive trading, or other similar conduct and apply to activities outside the United States related to event contracts.
(2)
Report
Not later than 1 year after the date of enactment of this Act, the Commission shall submit to Congress and publish on a publicly available website of the Commission a report on the findings of the study required under paragraph (1).
(c)
Joint Securities and Exchange Commission and Commodity Futures Trading Commission study
(1)
Study
The Securities and Exchange Commission and the Commission shall conduct a joint study on event contracts that includes—
(A)
the nature of event contracts that could be in the jurisdiction of the Securities and Exchange Commission;
(B)
the harmonization efforts of the Securities and Exchange Commission and the Commission relevant to event contracts; and
(C)
the nature, size, role, and use of decentralized blockchain applications to offer event contracts.
(2)
Report
Not later than 15 months after the date of enactment of this Act, the Commission shall submit to Congress and publish on a publicly available website of the Commission a report on the findings of the study required under paragraph (1).
6.
Authorization of appropriations; funding for event contract oversight
(a)
In general
There is authorized to be appropriated to the Commodity Futures Trading Commission $30,000,000 for each fiscal year of 2027 through 2031, to remain available until expended, for the purposes of—
(1)
implementing this Act and the amendments made by this Act; and
(2)
developing policies, rules, and guidance relating to event contracts.
(b)
Use of funds
Amounts made available pursuant to subsection (a) may be used for—
(1)
oversight, supervision, and enforcement of event contract markets;
(2)
rulemakings, reviews, and determinations required under subsection (d) of section 5c of the Commodity Exchange Act ( 7 U.S.C. 7a–2 );
(3)
the studies and reports required under section 5;
(4)
the establishment and operation of the Office of the Retail Advocate under subsection (d)(6) of section 5c of the Commodity Exchange Act ( 7 U.S.C. 7a–2 ); and
(5)
the development of technological, surveillance, and data analysis capabilities of the Commodity Futures Trading Commission.
(c)
Definition of event contract
In this section, the term  event contract  has the meaning given the term in subsection (d)(1) of section 5c of the Commodity Exchange Act ( 7 U.S.C. 7a–2 ).