Scott Alexander mentioned the Coalition for Political Forecasting in his recent write-up about Pratik Chougule’s talk at Manifest.

Below is the relevant excerpt:

Prediction markets have often existed in a regulatory gray area. A newer market, Kalshi, has tried to cooperate with regulators to become a new kind of fully-legal and highly-regulated platform, but it’s been tough going. The day of the conference, main government regulator CFTC denied Kalshi’s petition to have betting markets on elections (see the first item here for previous discussion). This is pretty discouraging; election betting is the bread and butter of prediction markets, and the government seems to have banned it.

Pratik Chougule leads the Coalition for Political Forecasting, a pro-prediction-market lobbying group. He discussed the CFTC’s recent decision, which was less about the normal factors and more about CFTC bureaucrats’ concern that they would be put in a situation where they had to determine election results. Suppose that Biden beats Trump in 2024, and Trump claims there was election fraud. Normally this is a problem for Congress, election regulators, the courts, the media, and the American people. But if there are election prediction markets, then election fraud would indirectly become a type of financial fraud, and now it is also a problem for the CFTC. I think this is a stretch – one could easily frame the question as “will such-and-such a source certify Biden as the winner of the 2024 election?” and then any fraud is already priced in – but I guess this isn’t how CFTC thinks.

He is not really optimistic about the government liberalizing any time soon. There was a moment in the late Trump administration when something could have happened. But the 2020 election fraud controversy made regulators more paranoid about election integrity, and the FTX collapse made regulators more paranoid about seemingly-innovative forms of online betting. The only good news Pratik has is that CFTC is very busy right now, and it will probably be easy for small projects to continue operating in legal gray areas and not face much regulatory scrutiny unless they do something really wrong or grow too big too quickly.

Read the full post here and follow Scott Alexander on Twitter at @slatestarcodex.