Key Points
- Senators Adam Schiff and John Curtis filed bipartisan legislation targeting sports and casino-style contracts on CFTC-regulated platforms.
- The legislation would modify the Commodity Exchange Act to prohibit specific event-based contracts.
- Coverage extends to both professional and collegiate sporting events plus casino-style gaming.
- The proposed legislation aims to preserve state-level gambling regulation authority.
- Kalshi warned the ban could drive users toward unregulated offshore platforms.
A bipartisan Senate initiative seeks to prohibit sports and casino-style contracts on platforms under federal regulatory oversight. The legislation focuses on entities registered with the Commodity Futures Trading Commission, specifically targeting companies like Kalshi and Polymarket’s domestic operations. The Wall Street Journal characterized this as the Senate’s first significant legislative move against these contract types.
New Legislation Takes Aim at Event-Based Trading
On Monday, Sens. Adam Schiff, D-Calif., and John Curtis, R-Utah, introduced the “Prediction Markets Are Gambling Act.” The legislation proposes amendments to the Commodity Exchange Act that would ban designated sports and casino-style contracts. The scope encompasses professional and collegiate athletics, along with traditional casino games such as blackjack and roulette.
Schiff stated the CFTC has been “greenlighting these markets and even promoting their growth.” He contended that Congress must “eliminate this backdoor which violates state consumer protections.” Curtis expressed concern that younger demographics face increased exposure to “addictive sports betting and casino-style gaming contracts.”
The legislative text clarifies that state gambling statutes and related contracts would remain intact. The measure strengthens state regulatory powers while establishing federal restrictions on registered platforms. Sponsors characterized the bill as a bipartisan solution to address regulatory shortcomings.
Platforms and States Battle Over Jurisdictional Authority
A Kalshi representative warned that prohibition would redirect market activity to offshore venues “where no regulation exists.” The representative suggested the proposal represents “casino interests that are threatened by competition.” Kalshi maintains that regulated platforms offer a “fairer choice” by eliminating traditional house advantage models.
Companies including Kalshi and Polymarket offer binary contracts spanning cryptocurrency, political outcomes, meteorological events, and cultural phenomena. Trading volume has gravitated heavily toward professional and collegiate sports. This concentration puts these platforms in direct competition with established sportsbooks like FanDuel and DraftKings.
The CFTC submitted a February legal brief claiming sole jurisdiction over event contracts. The commission maintained that state authorities cannot regulate federally supervised platforms. Multiple states have contested this interpretation through court proceedings.
Nevada obtained a temporary restraining order halting specific contracts offered by Kalshi. Arizona prosecutors filed criminal charges against Kalshi’s parent entities for allegedly operating without proper gambling licenses. Kalshi rejected these accusations and called on Arizona to dismiss the charges.
Massachusetts and Michigan launched separate legal actions against Kalshi related to gambling violations. Polymarket initiated litigation against Michigan to block enforcement of state gambling regulations. A Ninth Circuit panel rejected Kalshi’s request for emergency relief in the Nevada matter.
Trading Volumes Rise Amid Ongoing Legal Battles
Professional sports organizations have expressed concerns regarding potential market manipulation and insider trading risks. Meanwhile, Major League Baseball established a licensing agreement with Polymarket for official league data distribution. The contract mandates joint efforts to surveil betting patterns.
Kalshi and Polymarket have pursued funding rounds with reported valuations approaching $20 billion. Industry sources point to expanding trading volumes and growing appetite for event-based contracts. Major market makers participating include Susquehanna International Group and Jump Trading.
Tradeweb Markets formed a strategic partnership with Kalshi to disseminate prediction market pricing data. This collaboration enhances institutional investor access to contract information. The Senate legislation moves forward as litigation unfolds across numerous state and federal courts.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
