A bipartisan pair of U.S. senators is set to introduce legislation Monday that would prohibit federally regulated prediction markets from listing contracts tied to sports events and casino-style games — including slot machines, blackjack, poker and bingo. The move marks the first time the Senate has targeted the fast-growing prediction market sector.
Democratic Senator Adam Schiff and Republican Senator John Curtis co-authored the bill, which aims to ban platforms like Kalshi and Polymarket (operating under CFTC oversight) from offering any sports-related event contracts. It also extends to what the lawmakers call “casino-style products,” covering slot machines (one-armed bandits), blackjack, poker and bingo.
Lawmakers target CFTC’s regulatory stance
Schiff accused the Commodity Futures Trading Commission of “not only opening the floodgates but also promoting these markets.” He argued Congress must close a loophole that “violates state consumer protection laws, infringes on tribal sovereignty and contributes nothing to government revenue.” Curtis added: “Too many young people in Utah are getting hooked on sports betting and casino-style contracts that should be regulated by states, not by a federal agency.”
The bill arrives amid escalating tension between federal regulators, state authorities and the prediction market industry. While platforms like Kalshi and Polymarket offer binary contracts (derivatives that settle as either “yes” or “no”) on topics from crypto to elections, climate and pop culture, the overwhelming majority of volume comes from sports. This puts them in direct competition with traditional sportsbooks like FanDuel and DraftKings.
States fight back — and so do platforms
The CFTC has long argued it holds exclusive jurisdiction over event contracts as part of the derivatives market. In February, it filed a legal brief asserting that states lack authority to regulate prediction markets. States haven't backed down. Nevada secured a temporary injunction barring Kalshi from offering sports, election and entertainment contracts. Arizona went further, filing criminal charges against Kalshi's parent company for allegedly operating unlicensed gambling. Kalshi has pushed back, urging Arizona to drop the case.
Litigation has spread across multiple jurisdictions. Massachusetts and Michigan have both sued Kalshi; Polymarket preemptively countersued Michigan earlier this month to block aggressive enforcement of state gambling laws. The Ninth Circuit Court of Appeals recently denied Kalshi’s emergency motion to stay the Nevada injunction, effectively giving other states a green light to pursue similar actions.
Despite regulatory heat, capital stays hot
Even with mounting legal pressure, prediction markets continue to attract investor interest. Kalshi and Polymarket are reportedly seeking a valuation of $20 billion in upcoming funding rounds. Wall Street heavyweights Susquehanna International Group and Jump Trading already act as market makers on Kalshi, while financial data provider Tradeweb has partnered with the platform.
While some sports organizations worry about match-fixing and insider trading, Major League Baseball recently signed a licensing agreement with Polymarket, granting the platform access to league data — contingent on close cooperation to monitor suspicious betting activity.