Two US senators, Adam Schiff and John Curtis, are preparing legislation to ban sports-related prediction markets at the federal level. The proposed bill would prohibit platforms regulated by the Commodity Futures Trading Commission from offering contracts tied to sporting events and certain gambling-style products.
The legislation also seeks to restrict offerings resembling casino games such as blackjack, poker, and slot-style mechanics. Lawmakers argue these products blur the line between financial instruments and gambling.
Growing Regulatory Tensions
The proposal reflects rising friction between federal regulators and state authorities. The CFTC has maintained that it holds exclusive jurisdiction over event-based derivatives, including prediction markets tied to real-world outcomes.
However, critics say this framework allows companies to bypass state gambling laws and avoid contributing tax revenue. Senator Schiff emphasized concerns that the current system undermines state-level protections, while Curtis pointed to the growing exposure of younger users to betting-like products.
States Take Independent Action
Several states have already moved against prediction market platforms. Nevada, for example, secured a restraining order against Kalshi, blocking it from offering contracts on sports and other events.
Meanwhile, Arizona has pursued criminal cases against firms linked to Kalshi, alleging unlicensed gambling operations. These actions highlight the widening divide between state enforcement efforts and federal regulatory interpretations.
Industry Partnerships Add Complexity
Despite regulatory scrutiny, some prediction market operators are forming partnerships with major sports organizations. Major League Baseball has entered into a licensing agreement with Polymarket, allowing the platform to use official data and branding.
Similarly, the National Hockey League has established relationships with both Polymarket and Kalshi. These partnerships aim to improve monitoring and integrity, but also raise questions about the normalization of such platforms.
Multiple Bills Signal Broader Crackdown
The proposed legislation is part of a broader wave of regulatory efforts targeting prediction markets. Recent proposals include measures to ban contracts tied to sensitive events like wars, elections, and government actions.
Lawmakers have also raised concerns about insider trading risks and the potential misuse of privileged information. Some bills aim to restrict offshore platforms by limiting payment processing for unregulated operators.
Together, these efforts signal a growing push in Washington to redefine the boundaries between financial markets and gambling, as policymakers seek to close regulatory gaps and assert greater control over the rapidly evolving prediction market sector.
