A bipartisan bill was introduced in the U.S. Senate on Monday seeking to prohibit prediction markets like Kalshi and Polymarket from listing or accepting transactions related to sporting events and “casino-style games” such as slot machines, video poker, blackjack, and bingo.
The Wall Street Journal (WSJ) reported that the bill, co-sponsored by Sens. Adam Schiff (D-Calif.) and John Curtis (R-Utah), is the first bipartisan Senate legislation seeking to regulate entities regulated by the Commodity Futures Trading Commission (CFTC).
“The CFTC is greenlighting these markets and even promoting their growth,” Sen. Schiff 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.”
Prediction market exchanges such as Kalshi and Polymarket use different trading mechanisms, including futures or commodity contracts, which allow these entities to be registered with the CFTC as designated contract markets.
Because they are registered as a type of derivative exchange, prediction markets fall under federal oversight, unlike traditional sports betting sites such as FanDuel and DraftKings, which are regulated by states.
“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. Curtis.
“Banning sports on regulated prediction markets would just push this behavior offshore, where no regulation exists,” Elisabeth Diana, a Kalshi spokeswoman, responded. “It’s clear this bill is motivated by casino interests that are threatened by competition.”
In February, the CFTC argued that states have no regulatory control over these platforms, filing a “friend of the court” brief in the Ninth U.S. Circuit Court of Appeals, claiming that it has exclusive authority over the commodities-derivatives market, including event contracts, according to WSJ.
Several states along the West Coast have challenged prediction market entities in civil and criminal courts. “Arizona filed criminal charges against the parent companies of Kalshi, accusing them of operating an illegal gambling business without a license,” WSJ reports.
Nevada has additionally been granted a temporary restraining order against Kalshi from offering “event-based contracts related to sports, elections and entertainment.”
