New Bill Aims to Ban Sports Betting on Prediction Markets

Senators Adam Schiff (D-CA) and John Curtis (R-UT) have introduced a new bill aimed at curbing sports wagering and casino-style gaming on prediction market platforms. If passed, the legislation would target sites like Kalshi and Polymarket, which currently operate under the oversight of the Commodity Futures Trading Commission (CFTC).

Federal Oversight vs. State Regulation

Unlike traditional sportsbooks such as FanDuel and DraftKings, which are governed by state-specific gambling regulations, prediction markets have leveraged their federal regulatory status to offer betting contracts across all 50 states. The proposed bill seeks to close this gap by reclassifying these activities.

“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,” Schiff stated. Senator Curtis added that the move is intended to shield young users from addictive gaming contracts that bypass state-level controls.

Market Growth and Addiction Concerns

The push for tighter restrictions follows a significant surge in gambling activity since a 2018 Supreme Court ruling allowed states to legalize sports betting. Industry data highlights the rapid expansion of this sector:

• Total sports wagers rose from $4.9 billion in 2017 to $121.1 billion in 2023.
• Kalshi reported over $1 billion in trading volume for the Super Bowl this year, marking a 2700% year-over-year increase.
• Research from UC San Diego indicates that gambling addiction inquiries spiked by 61% following the launch of online sportsbooks.

Industry Pushback and Platform Changes

Kalshi has pushed back against the proposal, with spokesperson Elisabeth Diana arguing that the legislation is a protectionist measure designed to shield traditional casinos from competition. “It’s clear this bill is motivated by casino interests that are threatened by competition,” Diana stated.

The platforms are also facing internal and external pressure regarding integrity. Kalshi is currently banned in Nevada and faces criminal charges in Arizona. In response to concerns over insider trading and market manipulation, both platforms have recently updated their policies:

Kalshi: Announced new screening features developed in partnership with IC360 to block athletes, officials, and employees from trading in markets where they have influence. This follows incidents involving a political candidate trading on their own race and an editor for MrBeast using non-public information to place bets.

Polymarket: Updated its rules to explicitly prohibit users from wagering on events they can influence or using stolen confidential information.