S. 4060 — Prediction Markets Security and Integrity Act of 2026

This section states congressional findings that online prediction markets offer services substantially the same as betting, wagering, gambling, and sports gambling; that foreign online prediction markets have provided unregulated gambling services to U.S. individuals in violation of federal and state laws; that state regulators enforce gambling laws for consumer protection and public health and were not precluded from regulating such markets; and that, absent state regulation, such markets have caused harms including wager fixing based on insider information, misuse of sensitive corporate or government information (e.g., bets on Venezuelan President Nicolas Maduro's downfall or military action against Iran), bettor harm from addictive features (e.g., bonus funds) and inadequate safeguards (e.g., age restrictions), and availability to individuals as young as 18 years of age in violation of state laws.

This section defines 22 terms for purposes of the Act, including "online prediction market" (i.e., an online platform that allows agreements, contracts, transactions, or swaps between users over the outcome of non-financial events, such as sports and elections), "wager" (generally, the staking or risking of something of value upon the outcome of an event), "anonymized wagering data," "microbet," "proposition bet," "State wagering program," "interstate wagering compact," "sports organization," "gambling disorder," "national self-exclusion list," "suspicious transaction," and "reasonable lender standard" (i.e., underwriting criteria applied by an insured depository institution for an unsecured consumer loan).

This section prohibits individuals and operators of online prediction markets from (1) using material, nonpublic information for private gain in wagering; (2) creating or participating in listings or wagers presenting conflicts of interest; (3) engaging in manipulation or deceptive practices that predetermine outcomes or interfere with listing integrity; and (4) offering listings susceptible to manipulation or fraud, relating to war, military action, or death, violating state or federal law, or contrary to the public interest as determined by the Attorney General. It further requires operators to (1) ensure listings clearly state resolution conditions, determine resolutions, and promptly remove violating listings; and (2) develop, publish, and enforce rules prohibiting uses that violate these provisions or constitute prohibited transactions under section 4c of the Commodity Exchange Act (7 U.S.C. 6c) (i.e., wash sales, accommodation trades, fictitious sales, or price manipulation in commodity or swap transactions). Finally, this section directs the Attorney General to issue implementing rules, including a definition of material, nonpublic information, not later than 180 days after the date of enactment.

This section establishes a process for states to obtain Attorney General approval to administer a state wagering program. It requires states to submit an initial application—including a description of the program, applicable state laws, the state regulatory entity, and an assurance of adequate legal authority—with approval required within 180 days unless the program fails to meet standards under section 7; provides for written denial specifying unmet standards; mandates notice to the Attorney General of material changes within 30 days; sets a 3-year approval duration; allows renewal applications under the same process; and directs the Attorney General to promulgate regulations for emergency revocation if standards are unmet and for administrative review of denials or revocations.

This section establishes standards that a state online prediction market wagering program must meet for Attorney General approval of the state's application, including requirements to (1) designate a public state regulatory entity to regulate such markets and enforce wagering laws; (2) limit wagering to in-state individuals (or those in approved interstate compacts), verify locations, approve wagers based on verifiability and independence criteria, and prohibit bets on amateur or intercollegiate sports (as defined in 15 U.S.C. 7801), events after commencement, reload bonuses, tiered rewards exceeding $5 linked to gambling activity levels, and VIP programs tied to deposits or activity; (3) enable event organizers to request wagering restrictions necessary to maintain contest integrity (i.e., preventing reasonably foreseeable outcome manipulation), with the state entity required to promptly approve or deny such requests with public explanations and notify operators; and (4) prohibit wagering by individuals under 21 years of age or on national self-exclusion lists.

This section establishes a national self-exclusion list under the Public Health Service Act (42 U.S.C. 290dd et seq.) for individuals to voluntarily restrict their wagering—including through wager limits—with operators of online prediction markets located in any wagering opt-in state. In cooperation with state regulatory entities, the Secretary of Health and Human Services must maintain the list and a process for individuals to add or remove themselves.

This section prohibits operators of online prediction markets from allowing individuals under 21 years of age to register or engage in wagers and bans advertising or branding targeted at such individuals or placed where the majority of viewers are presumed to be under 21. The section further requires operators to (1) establish and implement a program to verify each user's full name, location, and age, including for all new and existing accounts prior to use; (2) block registration or wagering by individuals restricted due to economic sanctions, self-exclusion lists, or Department of Justice conflict-of-interest rules; and (3) comply with the regulations of a user's current state of location.

This section establishes enforcement mechanisms for violations of the Act and its regulations. Specifically, it (1) authorizes the Attorney General to bring civil actions for injunctive relief and imposes criminal penalties of a fine of not less than $50,000 per violation, imprisonment for up to two years, or both; (2) authorizes state attorneys general to bring parens patriae civil actions for injunctive relief against online prediction market operators, subject to 10 days' prior notice to the Attorney General (or immediate notice if infeasible) and federal rights to intervene and appeal; and (3) prohibits state actions against the same defendant based on the same facts while a federal action is pending.

This section prohibits the listing or making available for clearing or trading on or through an online prediction market (as defined in the Prediction Markets Security and Integrity Act of 2026) of any agreement, contract, transaction, or swap in an excluded commodity that is based on an occurrence, extent of an occurrence, or contingency, by adding a new subsection (d) to CEA Section 5c (7 U.S.C. 7a-2). It further specifies that nothing in the Act preempts or limits state or tribal authority to enact, adopt, promulgate, or enforce laws, rules, regulations, or measures concerning online prediction markets that are in addition to, or more stringent than, the Act's requirements, including prohibitions on operation within the state or tribal jurisdiction.

This section establishes a severability clause, providing that the invalidity of any provision of the Act, amendment made by the Act, regulation promulgated under the Act or an amendment, or their application to any person or circumstance shall not affect the remaining provisions, amendments, regulations, or applications, which shall continue to be enforced to the maximum extent practicable.