Key Highlights
- Bipartisan Senate legislation seeks to prohibit CFTC-regulated platforms such as Kalshi and Polymarket from listing sports betting contracts
- Shares of DraftKings (DKNG) and Flutter Entertainment (FLUT) each climbed approximately 8% in premarket hours Monday
- The proposed legislation would extend the ban to casino-style offerings including slots, blackjack, and video poker on prediction platforms
- Senators Adam Schiff and John Curtis are leading the bipartisan effort — marking the first cross-party Senate initiative on prediction market oversight
- Multiple states such as Nevada, Arizona, Massachusetts, and Michigan have already pursued legal measures against Kalshi independently
Shares of DraftKings (DKNG) surged approximately 8% during premarket hours Monday following a Wall Street Journal report revealing that bipartisan senators plan to unveil legislation blocking prediction market platforms from providing sports betting contracts.
The development represents positive momentum for established sports betting companies, which have faced mounting competition from platforms like Kalshi and Polymarket vying for the same customer base.
The legislative proposal would prohibit organizations under Commodity Futures Trading Commission (CFTC) oversight from offering contracts linked to sporting events. This would have immediate implications for Kalshi and Polymarket’s domestic operations — both leading players in the prediction market space.
Additionally, the bill would restrict these platforms from hosting casino-style entertainment, including slot machines, video poker, blackjack, and bingo games.
Sen. Adam Schiff (D., Calif.) criticized the CFTC for “greenlighting these markets and even promoting their growth,” stating that “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.”
Sen. John Curtis (R., Utah), serving as co-sponsor, emphasized personal concerns. “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,” he explained.
The bill represents a significant development as the first bipartisan Senate measure addressing prediction market regulation — signaling heightened attention to an escalating dispute between state authorities, federal agencies, and platform operators.
Flutter Entertainment (FLUT), parent company of FanDuel, similarly rose about 8% in premarket trading, benefiting from potential elimination of competitive pressure on its primary operations.
Ongoing State-Level Legal Conflicts
The congressional initiative arrives amid existing state actions against Kalshi. Nevada obtained a temporary restraining order preventing Kalshi from listing contracts related to sports, elections, and entertainment events.
Arizona escalated matters by filing criminal allegations against Kalshi’s parent entities for purportedly running an unlicensed illegal gambling operation — accusations Kalshi has contested while calling for dismissal.
Both Massachusetts and Michigan have initiated lawsuits against Kalshi, contending its prediction markets constitute unlicensed sports betting activities. Polymarket has countered with its own lawsuit against Michigan seeking to block enforcement of state gambling regulations.
At the federal tier, the CFTC has asserted exclusive authority over commodities derivatives, encompassing event-based contracts. The agency submitted a brief to the Ninth Circuit in February reinforcing this jurisdictional claim.
Sports League Perspectives
Major American sports organizations have generally embraced legalized sports betting. However, their stance on prediction markets remains more cautious — reflecting concerns about competitive integrity and risks associated with insider knowledge.
Notably, Major League Baseball recently finalized a licensing agreement with Polymarket, granting data access while establishing collaborative monitoring of baseball-related wagers on the platform.
As of Monday morning, DraftKings had not issued any official response regarding the proposed legislation.
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