U.S. senators have introduced a bipartisan bill that could restrict prediction market platforms from offering sports-related wagers and casino-style contracts, placing new limits on companies such as Kalshi and Polymarket.
Adam Schiff and John Curtis announced the proposal on Monday, arguing that so-called “sports prediction contracts” function similarly to traditional sports betting but operate under a different regulatory framework.
Federal Oversight Versus State Gambling Laws
Unlike sportsbooks such as FanDuel and DraftKings, which are regulated at the state level, prediction markets fall under federal oversight through the Commodity Futures Trading Commission.
The proposed legislation seeks to address that distinction, with lawmakers arguing that prediction markets effectively offer betting products nationwide, bypassing state gambling laws.
Schiff said in a statement that these contracts are equivalent to sports bets, while Curtis raised concerns about exposure to gambling among younger users.
Growth Of Sports Betting And Market Activity
Sports wagering has expanded rapidly in the United States following the US Supreme Court decision in 2018 that allowed states to legalize sports betting. Total wagers increased from $4.9 billion in 2017 to $121.1 billion in 2023.
Prediction markets have also seen significant growth. Kalshi reported more than $1 billion in trading volume tied to the Super Bowl this year, representing a 2,700% increase compared with the previous year.
Addiction Concerns And Research Findings
Concerns about gambling addiction have been cited as a key motivation behind the bill. Researchers at the University of California San Diego found that the availability of online sportsbooks corresponded with a 61% increase in searches for gambling addiction support, with continued growth over time.
Industry Response And Legal Challenges
Kalshi criticized the proposed legislation. Spokesperson Elisabeth Diana said the bill could limit competition and drive users to offshore platforms. Polymarket did not respond to requests for comment.
Kalshi has faced regulatory pressure in recent months, including a temporary ban in Nevada and criminal charges in Arizona.
Platform Safeguards And Rule Changes
On Monday, Kalshi announced new screening measures designed to prevent insider trading and market manipulation. The company said it would block athletes, officials, and employees from participating in markets tied to events they are involved in, working with integrity monitoring firm IC360.
The move follows incidents involving misuse of insider information. Kalshi recently suspended a political candidate for trading on their own election and penalized an editor associated with YouTube creator MrBeast for using non-public information to place bets.
Polymarket also updated its rules, stating that users cannot trade on stolen confidential information, act on illegal tips, or wager on events they can influence.
Featured image credits: BettorEdge
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