Schiff and Curtis introduce bill banning sports wagering on Kalshi and Polymarket

Sens. Adam Schiff (D-Calif.) and John Curtis (R-Utah) introduced bipartisan legislation on Monday called the 'Prediction Markets Are Gambling Act' that would ban prediction market platforms Kalshi and Polymarket from offering sports betting and casino-style games.

“Kalshi and Polymarket rush to ban insider trading as senators move to curb prediction markets NEW YORK (AP) — Kalshi and Polymarket, the two biggest prediction market platforms, rushed to institute new industry guardrails on Monday after two key senators announced legislation that could severely curtail the industry’s prospects”

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The bill targets entities regulated by the Commodity Futures Trading Commission (CFTC), prohibiting them from listing 'agreements, contracts, or transactions relating to any sporting event or athletic competition' as well as casino-style games like blackjack, poker, and slot machines.

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'Sports prediction contracts are sports bets — just with a different name,' Schiff stated, arguing these contracts are currently offered in all fifty states 'in clear violation of state and federal law.'

Curtis emphasized that the legislation is designed to 'respect states' authority, protect families, and keep speculative financial products out of spaces where they don't belong.'

This marks the first bipartisan Senate bill specifically targeting prediction markets, reflecting growing congressional concern about the rapidly growing industry that has seen explosive trading volumes, with Kalshi's Super Bowl trading volume reaching over $1 billion this year.

The legislation addresses a complex regulatory jurisdictional battle between federal and state oversight of prediction markets.

Traditional sports gambling platforms like FanDuel and DraftKings are regulated by individual states under state-by-state gambling laws, but prediction markets use technical trading mechanisms involving futures or commodity contracts that fall under federal CFTC oversight.

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Schiff criticized the CFTC for 'greenlighting these markets and even promoting their growth' rather than enforcing existing laws, arguing the current arrangement 'violates state consumer protections, intrudes upon tribal sovereignty, and offers no public revenue.'

The bill would amend the Commodity Exchange Act to clarify that 'sports and casino-style event contracts' may not be offered on platforms regulated by the commission, aiming to close what Schiff called a 'backdoor' allowing prediction markets to operate outside state gambling regulations.

Under the Trump administration, the CFTC has consistently asserted its 'exclusive jurisdiction' over prediction markets, with Chairman Mike Selig defending the agency's regulatory authority amid increasing legal challenges from states.

The proposed legislation has sparked immediate pushback from prediction market companies, with Kalshi arguing the bill would actually harm consumers by pushing activity to unregulated offshore platforms.

““Banning sports on regulated prediction markets would just push this behaviour offshore, where no regulation exists,” said Elisabeth Diana, a Kalshi spokeswoman told the masthead”

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'Banning sports on regulated prediction markets would just push this behavior offshore, where no regulation exists,' stated Elisabeth Diana, a Kalshi spokesperson, adding that the bill is 'clearly motivated by casino interests that are threatened by competition.'

Kalshi countered that their regulated markets 'offer a fairer choice to consumers, with no house that restricts winners and hooks the more they lose,' and argued that Congress should 'let competition run its course instead of protecting monopolies.'

The industry response comes as traditional sports betting companies appear to benefit from the proposed restrictions, with shares of DraftKings and FanDuel parent companies rising sharply following the bill's introduction.

Meanwhile, prediction market platforms have been actively seeking legitimacy through partnerships with major sports leagues, including a reported multiyear deal between Polymarket and Major League Baseball that could be worth up to $300 million.

The congressional action comes amid a growing state-level crackdown on prediction markets, with several states already taking legal action against the platforms.

Last week, Arizona became the first state to file criminal charges against Kalshi, accusing the company of operating an illegal gambling business, while Nevada secured a temporary restraining order preventing Kalshi from offering 'event-based contracts' related to sports, elections, and entertainment.

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Utah has been particularly aggressive, with Gov. Spencer Cox signing legislation expanding the state's definition of gambling to include 'prop bets' and Attorney General Derek Brown arguing that prediction markets represent 'the newest iteration of gambling.'

Cox has been vocal in his criticism, stating 'these gambling companies that are pretending to be something else' and declaring that 'it's, you know, walks like a duck and quacks like a duck — it's a duck.'

These state actions have prompted Kalshi to sue Utah, claiming that any state actions would preempt federal regulations, while the CFTC has filed court briefs defending its 'exclusive jurisdiction' over prediction markets amid the mounting legal challenges.

The bill reflects broader concerns about the rapid growth and potential risks of prediction markets, particularly regarding gambling addiction and market manipulation.

“Breaking: Prediction Markets Ban Widens as US Senators Push Bipartisan Bill to Crack Down on Sports Betting Highlights - US senators to introduce a bipartisan bill to ban sports betting on prediction markets”

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Curtis specifically highlighted that '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.'

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Research from the University of California San Diego supports these concerns, finding that when online sportsbooks became available, searches for help with gambling addiction increased by 61% and have continued growing.

The legislation also comes amid increased scrutiny of insider trading on prediction markets, with recent cases involving MrBeast employees and individuals using classified information about military operations.

Industry observers note that while the bill faces significant hurdles in Congress and would likely need presidential approval, its introduction signals that 'the conversation is even happening' about prediction market regulation, which is 'consistently noteworthy' given the industry's relatively recent emergence.

The bipartisan nature of the bill suggests that prediction market regulation may be an area where lawmakers can find common ground despite increasing political polarization in other areas.