Bipartisan Senate Bill Targets Prediction Markets’ Sports Contracts
Key Facts
- Senators Adam Schiff and John Curtis introduced the “Prediction Markets are Gambling Act,” a bill aimed at banning sports contracts on federally regulated prediction markets.
- The proposal is the first bipartisan Senate push focused specifically on prediction markets’ sports products, after months of state enforcement actions and federal regulatory shifts.
- The bill is designed to shut down what lawmakers and state regulators describe as sports betting offered outside state licensing, tax, and tribal-gaming frameworks.
- The market sees real stakes here: shares in major sportsbook operators rose after the bill surfaced, reflecting investor belief that curbing prediction markets could ease a growing competitive threat.
Senate Moves to Cut Off Prediction Markets’ Sports Expansion
A bipartisan group of senators has now moved from criticism to legislation. On March 23, Sens. Adam Schiff of California and John Curtis of Utah introduced the “Prediction Markets are Gambling Act,” a bill that would prohibit federally regulated prediction markets from listing sports-related contracts and casino-style products. The measure is aimed squarely at platforms such as Kalshi and Polymarket, which have expanded aggressively into sports-style event contracts while arguing they fall under federal commodities law rather than state gambling law.
The bill lands after a rapid policy shift at the CFTC. On February 4, the agency withdrew its 2024 proposed event-contract rule and also withdrew staff guidance cautioning the industry about sports event contracts. Chairman Michael Selig said at the time that the earlier advisory had created “confusion and uncertainty,” and the CFTC has since opened a new prediction-markets rulemaking, with comments due April 30.
That sequence matters because it helps explain why lawmakers are now trying to legislate directly. Schiff and other Senate Democrats had already warned in February that the CFTC was backing away from a longstanding view that sports-based event contracts could qualify as prohibited gaming. In a letter to Selig, they said the agency had withdrawn both the proposal and prior guidance that included sporting events in the definition of gaming.
The state-versus-federal fight is now at the center
The legal fight has never really been about whether these products look like sports betting. It has been about who gets to regulate them. State regulators, tribal stakeholders and sportsbook interests have argued that prediction markets are offering gambling-like products while avoiding state licensing, consumer-protection rules and tax regimes. The core dispute, as the National Conference of State Legislatures put it, is whether these platforms are federally regulated derivatives or gambling under state law.
That conflict is already playing out in the courts and in state enforcement. Several states have moved against Kalshi and Polymarket, while Nevada recently obtained a temporary restraining order that blocked Kalshi from offering event-based contracts tied to sports, elections or entertainment without a gaming license.
Platforms are already adjusting under pressure
Kalshi and Polymarket responded to the latest pressure by tightening insider-trading restrictions. Kalshi has said it would bar political candidates from trading on their own campaigns and block people involved in college or professional sports from trading contracts tied to those sports. “Further demonstrate our commitment to safe markets,” a Kalshi spokesperson said in a statement to AP. Polymarket also revised its rules, and Neal Kumar, the company’s chief legal officer, said in a statement that the changes “make our expectations abundantly clear for every participant across both platforms.”
Those moves, however, do not answer the core argument behind the bill. The legislation is not just about insider trading or market integrity. It is about whether sports prediction contracts should exist at all on federally regulated platforms that do not operate under state sportsbook rules.
Why This Matters For Bettors
For bettors, the immediate issue is market access. If this bill became law, the practical effect would be to remove one of the fastest-growing alternatives to traditional sportsbooks for sports-event trading in the US. That would not change betting options at state-regulated books, but it would reduce the number of legal channels competing for the same user.
That matters because competition shapes pricing, product design and promotional intensity. Prediction markets have been attractive to some users because they present sports outcomes through exchange-style pricing rather than the margin structure of a traditional bookmaker. State-regulated books and their investors clearly see that as a threat: shares of DraftKings, Flutter, MGM and Penn all moved higher after the Senate bill surfaced. Markets do not react like that unless investors believe a competitor’s growth could be meaningfully constrained.
There is also a defensive angle for the licensed sportsbook sector. State-licensed operators have spent years building around market-access fees, compliance costs, tax burdens, league partnerships and state-by-state approvals. Prediction markets have been able to argue for a different regulatory lane through federal commodities oversight. If that path remains open for sports, it creates a form of regulatory arbitrage that licensed books have every incentive to challenge. This bill is Congress starting to engage that argument directly.
For bettors specifically, the broader consequence is less about ideology than about market structure. A federal ban on sports contracts would preserve the current state-regulated sportsbook model and reduce the chances of a parallel national market emerging through the CFTC. That could protect existing books from a disruptive rival, but it could also limit innovation in pricing formats and exchange-style products.
One more point matters here: this is no longer just a niche policy dispute. The Senate bill follows Blumenthal’s broader March 11 proposal to regulate prediction markets, require consumer safeguards and return authority to the states. That means the federal conversation has moved from isolated criticism to multiple legislative tracks, with sports at the center of the most commercially important one.
What Happens Next
The bill still faces the usual obstacles of federal legislation, and nothing suggests passage is imminent. But the filing itself changes the landscape. It gives state regulators, tribal interests and sportsbook operators a concrete federal vehicle to rally around, while putting prediction-market companies on the defensive in Washington.
At the same time, the CFTC remains a major variable. The agency withdrew its earlier event-contract proposal in February, but it also opened a new rulemaking on prediction markets in March. That means Congress, federal regulators and state authorities are all now trying to shape the same market at once.
For Kalshi and Polymarket, the near-term playbook is likely to stay the same: tighten compliance optics, defend federal preemption and argue that incumbents are trying to legislate away a rival product. For sportsbooks and their investors, the Senate bill is the strongest sign yet that Washington may be open to drawing a clear line between federally regulated event contracts and state-regulated sports betting.
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Marcus has spent over 20 years navigating the legal side of online betting - from his early days consulting for offshore operators to helping licensed U.S. sportsbooks launch in regulated markets. He’s worked with compliance teams, reviewed licensing frameworks in 15+ states, and advised on some of the biggest regulatory shifts since PASPA was repealed.
At BettingScanner, Marcus serves as the voice of reason - translating legalese into plain English and helping bettors understand what’s legal, what’s risky, and where the gray areas live. If you’re ever unsure about the rules, Marcus is your man - as he probably helped write them.
