US Lawmakers Introduces Bill to Ban Sports Prediction Market

U.S. senators have introduced a bipartisan bill to ban prediction markets for the sports industry. The two senators, Republican John Curtis of Utah and Democrat Adam Schiff of California, introduced the Prediction Market Are Gambling Act.

The bill seeks to ban all entities registered with the Commodity Futures Trading Commission (CFTC) from listing any contract similar to sports betting or a casino-style game. It is the latest attempt to carve out sports from the prediction markets.

Senators Argue States Should Retain Authority on Sports Betting

According to a statement from the senators, the proposed legislation seeks to preserve states’ authority to regulate sports betting and casino gaming. It noted that these gambling activities should be regulated by state regulators, not the federal government.

Senator Curtis noted that prediction markets have exposed several young people to sports betting. In his view, this speculative financial market does not belong with sports betting and casino gaming and should therefore be kept out.

His counterpart, Schiff, also aligned with this view, noting that sports prediction contracts are sports betting and the CFTC has failed to properly regulate them. Thus, he believes Congress must take steps to close the loophole that allows prediction market platforms to bypass state regulations.

He said:

“Sports prediction contracts are sports bets—just with a different name. And yet, these contracts are currently offered in all fifty states in clear violation of state and federal law

The bill sponsors criticisms appear to focus on the CFTC’s failure to regulate sports prediction markets. They stated that the CFTC had previously prohibited listing contracts relating to gaming, but has now changed its stance to support such listings.

Sentiments Turning Against Prediction Market

Meanwhile, the proposed legislation is only the latest sign of public sentiment turning against the prediction market sector. While platforms such as Kalshi and Polymarket have seen massive adoption, as evidenced by their trading volume, there has also been pushback.

Most of the pushback has come from states that argue that prediction platforms offering contracts for betting are a violation of state law. This has already led to multiple lawsuits by various states, including a criminal action in Arizona against Kalshi.

In the most recent development, Nevada won a temporary restraining order against Kalshi, preventing it from offering event contracts on sports, entertainment, and elections.

Unsurprisingly, the CFTC has backed prediction markets in the fight, arguing that states lack authority over them. The regulator has criticized Arizona’s criminal action while filing an amicus curiae brief in the Court of Appeals.

The fight over whether a prediction market platform can offer sports contracts could go to the root of the platform. While prediction markets came into the limelight with contracts around events such as elections and pop culture moments, the majority of their volume now comes from sports betting.

According to a report, 89% of Kalshi’s revenue comes from the sports prediction market, and more than two-thirds of the prediction market’s volume comes from sports. Interestingly, stocks of companies with sports betting businesses, such as DraftKings and FanDuel parent company Flutter, and MGM Resorts, rose today after news of the bill broke.