US Senators recently introduced the Prediction Markets Are Gambling Act aimed at stopping CFTC-registered firms, such as Kalshi or Polymarket, from listing various gambling-related contracts. This legislation targets event contracts tied to sports, including professional and collegiate games, as well as traditional casino games such as blackjack and roulette.
This bill seeks to modify the Commodity Exchange Act to prohibit the trading of these contracts on regulated exchanges, ensuring federal law does not supersede state gambling regulations. One senator articulated the intent behind the measure as a means to clarify jurisdiction, support state control over betting, and limit the spread of what he considers inappropriate speculative products.
Given the growing number of young people engaging with potentially addictive sports betting and casino-style contracts, the act emphasizes the necessity of state oversight rather than federal regulation. The senator argues that these markets should be governed under state laws to protect families and uphold state authorities.
The landscape for sports-related prediction contracts has expanded significantly, functioning similarly to betting products and enjoying widespread availability across all states. One senator has pointed out the CFTC’s failure to curtail the growth of these markets, suggesting that the agency has not enforced its laws but rather encouraged the expansion of these speculative financial instruments.
As prediction markets flourish, with total trading volumes predicted to surpass $50 billion in the current year, concerns are mounting regarding their impact on state revenues. Since the 2018 Supreme Court ruling that legalized sports betting at the state level, states have developed regulatory frameworks that not only generate significant public revenue but also include consumer protections. The existence of federally overseen prediction markets—which avoid state licensing and tax responsibilities—has led to frustration among governors and state gaming bodies.
Legal disputes are intensifying for companies like Kalshi and Polymarket as states move to challenge their operations, considering them illegal betting platforms. Both companies are now depending on federal oversight from the CFTC as part of their defense strategy in court. The CFTC is also reinforcing its stance on federal authority over these markets in light of increasing state legal challenges.