A new bill introduced in the Senate Monday would ban prediction markets like Kalshi and Polymarket from accepting or listing transactions related to sports events and casino-style games.
The bill, co-sponsored by Senator Adam Schiff, D-Calif., and John Curtis, R-Utah, is the first bipartisan legislation introduced in the Senate targeting the rise of sports betting on services like Polymarket and Kalshi. While traditional sports gambling is regulated by states, prediction markets utilize a different technical trading mechanism, via futures or commodity contracts, that fall under federal oversight.
“Sports prediction contracts are sports bets — just with a different name,” said Sen. Schiff in a statement announcing the bill’s introduction. “These contracts are currently offered in all fifty states in clear violation of state and federal law.”
“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,” Schiff said.
Created in 1974, the Commodity Futures Trading Commission has the exclusive right under the federal Commodity Exchange Act to regulate futures, options, and swaps for registered commodities entities. Several prediction markets, like Kalshi and Polymarket, have registered with the CFTC as a type of derivative exchange called a designated contract market.
The new bill would ban any entity registered with the CFTC from listing or making available any “agreement, contract, or transaction relating to any sporting event or athletic competition,” in addition to banning similar contracts for any casino-style game like poker or blackjack.
“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,” Sen. Curtis said in a statement. “The Prediction Markets Are Gambling Act is about respecting states’ authority, protecting families, and keeping speculative financial products out of spaces where they don’t belong.”
Prediction markets have soared in popularity over the past year in the United States, seeing over $1.2 billion in total trading during this year’s Super Bowl Sunday, with trading volumes for the entire week soaring past $4.5 billion.
The prediction market companies are hot commodities themselves. Last week, The Wall Street Journal reported, citing several unnamed sources, that Kalshi had secured a $22 billion valuation in its latest round of venture capital funding, while rival Polymarket is reportedly hoping to attain a similar valuation.
Both services have been jockeying for users’ attention and wallets, opening free grocery stores and trading-themed bars to lure in potential clients.
However, the services have also attracted mounting scrutiny over insider trading allegations in sports and other arenas. Leading AI company OpenAI fired an employee over allegations the individual had placed bets on Polymarket tied to advance knowledge of the company’s product announcements, while bets on the death of Iran’s Ayatollah Ali Khamenei highlighted the use of prediction markets in war and raised questions about national security risks.
On Thursday, Major League Baseball announced a new partnership with Polymarket and the CFTC “to create clear boundaries with the goal of mitigating risk while providing fan engagement opportunities.”