Lawmakers move to ban sports betting on prediction markets in bipartisan Senate push

U.S. senators introduced legislation on Monday that would prohibit Commodity Futures Trading Commission-registered entities, including Kalshi and Polymarket's U.S. platform, from listing prediction contracts tied to sports or casino-style games, marking the first bipartisan Senate effort to directly restrict the fast-growing sector.

Sens. Adam Schiff, D-Calif., and John Curtis, R-Utah, said the "Prediction Markets Are Gambling Act," would amend the Commodity Exchange Act to bar any such contracts from being listed or traded on a registered platform. The Wall Street Journal first reported the news.

The bill would apply to a broad range of products, including contracts tied to professional and collegiate sports, as well as casino-style games such as slot machines, blackjack, roulette, and bingo. It also specifies that it would not preempt state laws governing gambling or related contracts, reinforcing states' authority alongside the proposed federal restrictions.

"The CFTC is greenlighting these markets and even promoting their growth," Schiff said in a statement, arguing Congress should "eliminate this backdoor which violates state consumer protections, intrudes upon tribal sovereignty and offers no public revenue."

Curtis added that "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."

A Kalshi spokesperson told The Block that banning sports-related contracts on regulated prediction markets would push activity offshore "where no regulation exists" and argued the proposal is motivated by "casino interests that are threatened by competition." The spokesperson added that regulated prediction markets offer a "fairer choice" for consumers without a traditional house model and said policymakers should "let competition run its course instead of protecting monopolies."

The Block also reached out to Polymarket for comment.

Mounting legal and regulatory tensions

The proposal lands amid an escalating clash between federal regulators, states, and industry participants over how prediction markets should be governed. While platforms like Kalshi and Polymarket offer binary contracts across multiple categories such as crypto, politics, weather, and pop culture, much of their activity has concentrated around professional and college sports, placing them in direct competition with traditional sportsbooks like FanDuel and DraftKings.

The CFTC has argued that it holds exclusive jurisdiction over event contracts as part of the commodities-derivatives market, filing a brief in February asserting that states lack regulatory authority over such platforms.

States have pushed back. Nevada recently secured a temporary restraining order blocking Kalshi from offering contracts tied to sports, elections, and entertainment, while Arizona filed criminal charges against Kalshi's parent companies, alleging that it operates an unlicensed gambling business. Kalshi has disputed those claims and urged Arizona to withdraw the charges.

Legal challenges now span multiple jurisdictions. States including Massachusetts and Michigan have also sued Kalshi, while Polymarket filed its own lawsuit against Michigan earlier this month to prevent enforcement of state gambling laws. A recent Ninth Circuit decision denying Kalshi's emergency request for a stay in a Nevada-related case could open the door to further state-level action.

At the same time, concerns have emerged from sports leagues over the potential for manipulation and insider activity tied to prediction markets, even as some organizations engage with the sector. Major League Baseball recently struck a licensing deal with Polymarket, granting it access to league data while requiring cooperation to monitor betting activity.

Despite the regulatory overhang, the sector continues to expand rapidly. Kalshi and Polymarket have reportedly explored fundraising at valuations around $20 billion in recent months, reflecting surging trading volumes and growing interest in event-based contracts. Institutional firms including Susquehanna International Group and Jump Trading are active as market makers on Kalshi, and Tradeweb Markets has partnered with the platform to distribute prediction market data.

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Updated with official statements from Sens. Schiff and Curtis, the bill text, and comment from Kalshi.