Prediction markets are facing fresh bipartisan scrutiny in the US Senate as companies such as Kalshi and Polymarket continue to battle state-led efforts to regulate online betting.
A bill was introduced in the US Senate on Monday that would ban federally regulated platforms from allowing wagers on sporting events, what would be a huge blow to marketplaces where billions of dollars have been traded on major events like the Super Bowl and the NCAA’s March Madness.
The bill follows several other state-level efforts to regulate marketplaces, which are overseen by a federal agency. On Friday, a Nevada judge temporarily banned most of Kalshi’s operations in the state for two weeks after the state filed a lawsuit against the company.
Online prediction markets are currently regulated by the Commodity Futures Trading Commission (CFTC). Under the Trump administration, the agency has argued it has exclusive regulatory control over the companies.
Adam Schiff, a Democratic senator from California who introduced the bill with John Curtis, a Republican senator from Utah, said in a statement that the CFTC is “greenlighting these markets and even promoting their growth”.
“Sports prediction contracts are sports bets – just with a different name.” Schiff said in a statement. “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.”
The bill also bans casino-style games such as virtual poker, slot machines and blackjack from being available on the platforms. Curtis said in a statement that “addictive sports betting and casino-style gaming contracts” belong “under state control, not under federal regulators”.
In response to the bill, Kalshi said in a statement: “Banning sports on regulated prediction markets would just push this behavior offshore, where no regulation exists.”
“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,” the company said. “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 a request for comment.
Sports betting was largely illegal in the US until 2018, when the supreme court struck down a 1992 federal law banning commercial sports betting in most states. Since the ruling, newer prediction markets that have fewer age limits and events restrictions are gathering steam and seeing hundreds of millions of dollars in trading volume each week.
These platforms allow users to bet on any event, from Oscar winners to ongoing military conflicts. Polymarket has also started to deem itself a source of news, though a New York Times analysis found that the company has posted hundreds of false and misleading posts on its social media feeds.
Much of the regulatory pushback has been from the states. Last week, Arizona’s attorney general filed criminal charges against Kalshi, accusing the site of election wagering and running an illegal gambling business without a license.
“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,” said Kris Mayes, Arizona’s attorney general. “No company gets to decide for itself which laws to follow.”
Nevada last month sued Kalshi arguing that the company needs to be licensed in the state for wagering activity. On Friday, a Nevada judge dealt the state a brief win with a temporary restraining order that bans the company from operating in the state until its next hearing on 3 April. The judge said Kalshi cannot offer event-based contracts related to sports, elections and entertainment and prohibited users under 21 years old from using its platform.
“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,” said Mike Dreitzer, chair of the Nevada gaming control board, in a statement.
