Senate Bill Aims to Keep Prediction Markets Out of Sports

Two U.S. senators want to curb prediction markets’ involvement in the sporting world.

To that end, the lawmakers are set to introduce legislation that would bar entities regulated by the Commodity Futures Trading Commission (CFTC) from listing contracts related to sporting events, The Wall Street Journal (WSJ) reported Monday (March 23).

This bill would cover the prediction-market exchanges Kalshi and Polymarket’s U.S. platform, the report added.

“The CFTC is greenlighting these markets and even promoting their growth,” Sen. Adam Schiff (D-Calif.) said. “It’s time for Congress to step in and eliminate this backdoor, which violates state consumer protections, intrudes upon tribal sovereignty and offers no public revenue.”

According to the report, the legislation is the first bipartisan Senate bill aimed at regulating the prediction market space. It also includes language blocking “casino-style games” like bingo, slot machines and blackjack from being listed on the platforms, the WSJ added.

“Too many young people in Utah are getting exposed to addictive sports betting and casino-style gaming contracts that belong under state control, not under federal regulators,” said Sen. John Curtis (R-Utah), the proposed bill’s co-sponsor.

While Kalshi and Polymarket let users wager on things like the outcome of an election or the Federal Reserve’s rate decisions, much of their trading activity centers around sports. This, the WSJ added, puts the companies in competition with the likes of FanDuel and DraftKings.

“Banning sports on regulated prediction markets would just push this behavior offshore, where no regulation exists,” Elisabeth Diana, a Kalshi spokeswoman, told the WSJ. “It’s clear this bill is motivated by casino interests that are threatened by competition.”

The new proposed federal legislation is happening while prediction markets are facing regulatory pushback on the state level.

Last week, Arizona charged Kalshi with violating the state’s laws against operating an unlicensed wagering business and betting on elections.

“Kalshi may brand itself as a ‘prediction market,’ but what it’s actually doing is running an illegal gambling operation and taking bets on Arizona elections, both of which violate Arizona law,” Arizona Attorney General Kris Mayes said in a press release.

Kalshi, in a statement to PYMNTS, called the charges meritless, and said the company will fight them in court.

“This is a jurisdictional dispute and entirely inappropriate as a criminal prosecution,” CFTC Chairman Michael Selig said in an X post, adding that the commission was “watching this closely and evaluating its options.”

Days later, a judge in Nevada temporarily banned Kalshi from offering event contracts for sports, election and entertainment in the state. This came after the Nevada Gaming Control Board argued that prediction markets that facilitate unlicensed gambling are illegal in the state.

Regulators have also secured temporary restraining orders against Polymarket, Robinhood, Crypto.com and Coinbase.