Age verification requirement for wagering or prediction market platforms

(a)

Prohibition

(1)

In general

A wagering operator or a prediction market platform operator may not permit a user to access a wagering or prediction market platform under the control of the wagering operator or the prediction market platform operator, or accept a wager, in the case of a wagering operator, or place an order, in the case of a prediction market operator, from such user, that the wagering operator or the prediction market platform operator has not verified, using commercially available facial recognition technology, has attained more than 18 years of age. (2)

Data minimization

(A)

Limitation

In verifying the age of a user pursuant to paragraph (1), a wagering operator or a prediction market platform operator may not collect, process, or transfer the covered data of a user beyond what is reasonably necessary, proportionate, and limited to the purposes for verifying the age of the user. (B)

Deletion required

A wagering operator or a prediction market platform operator shall delete any covered data collected with respect to a user that the wagering operator or the prediction market platform operator determines is not necessary for compliance with the requirements of this subsection. (b)

Enforcement by Federal Trade Commission

(1)

Unfair or deceptive acts or practices

A violation of subsection (a) (or a regulation promulgated under such section) shall be treated as a violation of a regulation under section 18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)) regarding unfair or deceptive acts or practices. (2)

Powers of Commission

The Commission shall enforce subsection (a) (and any regulations promulgated under such sections) in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Federal Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated into and made a part of this Act. Any wagering operator or prediction market platform operator that violates such sections (or any regulations promulgated under such sections) shall be subject to the penalties and entitled to the privileges and immunities provided in the Federal Trade Commission Act. (3)

Regulations

The Commission may promulgate, pursuant to 553 of title 5, United States Code, any regulations the Commission determines necessary to carry out the provisions of this Act. (c)

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).

(d)

Definitions

In this section: (1)

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. (2)

Covered data

The term covered data means biometric data that— (A)identifies a user; or (B)is reasonably linkable to the identity of a user. (3)

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— (A) 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) of the Commodity Exchange Act (7 U.S.C. 1a)); and (B)listed by a designated contract market or swap execution facility. (4)

Occurrence

The term occurrence means something that happens, such as an event, including the outcome of another event. (5)

Wager

The term wager has the meaning given such term in section 5362 of title 31, United States Code. (6)

Wagering operator

The term wagering operator means— (A)a licensed gaming facility that offers sports wagering; and (B)an interactive sports wagering platform.