A new bill introduced in the Senate on Monday would ban speculative markets such as Kalshi and Polymarket from accepting or listing activities related to sports events and casino-style games.
The bill, sponsored by Senators 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 such as Polymarket and Kalshi. While traditional sports gambling is regulated by states, prediction markets use a different trading method, with futures or commodity contracts, which fall under state supervision.
“Sports betting contracts are sports betting – with a different name,” said Sen. Schiff in a statement announcing the introduction of the bill. “These contracts are currently being awarded in all fifty states in clear violation of state and federal law.”
“It is time for Congress to step in and remove this scandal that violates federal consumer protections, interferes with national sovereignty, and does not provide public funds,” Schiff said.
Created in 1974, the Commodity Futures Trading Commission has special authority under the federal Commodity Exchange Act to regulate futures, options, and exchanges of registered commodity companies. A few speculative markets, such as Kalshi and Polymarket, are registered with the CFTC as a type of exchange for what is called a fixed-term contract market.
The new bill would prohibit any entity registered with the CFTC from listing or making available any “agreement, contract, or activity related to any sporting event or athletic contest,” in addition to prohibiting similar contracts for any casino-style game such as poker or blackjack.
“Too many young people in Utah have access to addictive sports betting and casino-style gaming contracts that are under state control, not federal regulation,” said Sen. Curtis in a statement. “I Prediction Markets Are Gambling Act it’s about respecting the authority of states, protecting families, and keeping speculative financial products out of places where they don’t belong.”
Speculation markets increased in popularity last year in the United States, seeing more than $1.2 billion in total trading this year on Super Bowl Sunday, with trading volumes for the entire week increasing by $4.5 billion.
Prediction market companies are hot commodities in their own right. Last week, the Wall Street Journal reported, citing several unnamed sources, that Kalshi was valued at $22 billion in its latest round of venture capital funding, while rival Polymarket is reportedly hoping for the same amount.
Both services have been vying for users’ attention and wallets, opening free grocery stores and trade-themed bars to attract potential customers.
However, the services have attracted increasing scrutiny for alleged trading within sports and other platforms. Leading AI firm OpenAI has fired an employee over allegations that the person placed a bet on the jailed Polymarket to boost awareness of the company’s product announcements, while a bet 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 reducing risk while providing opportunities for fan engagement.”
