Bipartisan Senate Bill Proposes Ban on Sports Betting for Online Prediction Markets
A bipartisan bill was introduced in the US Senate on Monday, aiming to prohibit federally regulated platforms from allowing wagers on sporting events. This legislation represents a significant challenge to online prediction markets, where billions of dollars have been traded on major events such as the Super Bowl and the NCAA’s March Madness.
Growing Scrutiny of Prediction Markets
Prediction markets are facing increased bipartisan scrutiny in the US Senate as companies like Kalshi and Polymarket contend with state-led efforts to regulate online betting. The bill follows several state-level initiatives to oversee these marketplaces, which are currently regulated by the Commodity Futures Trading Commission (CFTC). Under the Trump administration, the CFTC has asserted exclusive regulatory control over these companies.
Adam Schiff, a Democratic senator from California, introduced the bill alongside John Curtis, a Republican senator from Utah. In a statement, Schiff criticized the CFTC for "greenlighting these markets and even promoting their growth." He argued, "Sports prediction contracts are sports bets – just with a different name. 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."
State-Level Legal Challenges and Responses
Recent state actions have intensified the regulatory pressure. On Friday, a Nevada judge issued a temporary restraining order, banning most of Kalshi’s operations in the state for two weeks after Nevada filed a lawsuit against the company. The judge prohibited Kalshi from offering event-based contracts related to sports, elections, and entertainment, and barred users under 21 from using its platform.
Mike Dreitzer, chair of the Nevada gaming control board, stated, "Prediction markets, to the extent they facilitate unlicensed gambling, are illegal in Nevada, and we have a statutory duty to protect the public. We want people in the state to wager safely at a licensed book."
In Arizona, the attorney general filed criminal charges against Kalshi, accusing the site of election wagering and operating an illegal gambling business without a license. Kris Mayes, Arizona’s attorney general, said, "Kalshi may brand itself as a 'prediction market,' but what it’s actually doing is running an illegal gambling operation and taking bets on Arizona elections, both of which violate Arizona law. No company gets to decide for itself which laws to follow."
Industry Reaction and Broader Context
In response to the Senate bill, Kalshi issued a statement arguing, "Banning sports on regulated prediction markets would just push this behavior offshore, where no regulation exists." The company added, "It’s clear this bill is motivated by casino interests that are threatened by competition. They’re more worried about protecting their monopolies than protecting consumers. Sports trading on regulated prediction markets offer a fairer choice to consumers, with no house that restricts winners and hooks people the more they lose."
Polymarket and the CFTC did not immediately respond to requests for comment on the bill.
The bill also seeks to ban casino-style games, such as virtual poker, slot machines, and blackjack, from being available on these platforms. Curtis emphasized, "addictive sports betting and casino-style gaming contracts" belong "under state control, not under federal regulators."
Historical and Current Trends in Sports Betting
Sports betting was largely illegal in the US until 2018, when the Supreme Court overturned a 1992 federal law banning commercial sports betting in most states. Since that ruling, newer prediction markets with fewer age limits and event restrictions have gained momentum, attracting hundreds of millions of dollars in weekly trading volume.
These platforms allow users to bet on a wide range of events, from Oscar winners to ongoing military conflicts. Polymarket has even positioned itself as a news source, though a New York Times analysis found that the company has posted hundreds of false and misleading posts on its social media feeds.
As regulatory pushback continues from states like Nevada and Arizona, the future of online prediction markets remains uncertain, with this Senate bill marking a pivotal moment in the ongoing debate over gambling regulation in the United States.
