Lawmakers Push to Ban Sports Betting on Prediction Markets

A bipartisan group of U.S. lawmakers is moving to close what they see as a growing loophole in the sports betting landscape, introducing legislation that would ban sports-related wagering on federally regulated prediction markets.

The proposal, first reported by The Wall Street Journal, represents one of the most significant federal efforts yet to rein in a rapidly expanding sector that has blurred the lines between financial trading and gambling.

According to the Journal, Senators Adam Schiff and John Curtis are leading the bipartisan push to prohibit platforms regulated by the Commodity Futures Trading Commission (CFTC) from offering contracts tied to sporting events.

These platforms—including Kalshi and Polymarket—have grown quickly by allowing users to trade on the outcomes of real-world events, including sports.

“The CFTC is greenlighting these markets and even promoting their growth,” Schiff said. “It’s time for Congress to step in and eliminate this backdoor.”

The legislation would also extend beyond sports, banning so-called “casino-style games” such as blackjack and slot-style contracts that have appeared on some platforms. Lawmakers argue that these offerings bypass state gambling laws and tribal gaming agreements while generating no tax revenue for states.

Curtis echoed concerns about accessibility and exposure, telling The Wall Street Journal that “too many young people” are being introduced to betting-like products outside traditional regulatory frameworks.

What Are Prediction Markets and How Do They Work?

Prediction markets operate differently from traditional sportsbooks. Instead of placing bets against a house, users buy and sell contracts tied to the outcome of an event—such as whether a team will win a game. Each contract typically pays out a fixed amount (often $1) if the outcome occurs.

Prices fluctuate based on supply and demand, meaning a contract trading at $0.60 implies a roughly 60% perceived probability of that outcome. These markets are regulated as financial instruments under the CFTC, rather than as gambling products under state law.

Platforms like Kalshi and Polymarket have marketed themselves as tools for forecasting and hedging risk, offering contracts not just on sports, but also politics, economics, and global events.

However, sports-related contracts have become a major driver of activity, bringing them into direct competition with established sportsbooks like DraftKings and FanDuel.

Growing Controversy Around Sports Prediction Markets

Over the past year, prediction markets have drawn increasing scrutiny from regulators, state governments, and the broader gambling industry. Critics argue that these platforms are effectively offering nationwide sports betting without adhering to state-by-state licensing systems.

Several states—including Nevada, Arizona, and Massachusetts—have taken legal action against prediction market operators, alleging they are offering unlicensed gambling products.

At the same time, the explosive growth of the sector has intensified concerns. Trading volumes have surged into the billions, with sports contracts accounting for a significant portion of activity.

There are also concerns about market integrity. Lawmakers and regulators have pointed to risks of insider information influencing outcomes, particularly in markets tied to sports or other real-world events. These fears have prompted platforms to introduce new safeguards, including restrictions on athletes and insiders participating in markets tied to events they can influence.

Supporters of prediction markets, however, argue that banning regulated platforms could push activity to offshore or unregulated sites. A Kalshi spokesperson warned that prohibiting sports contracts would “push this behavior offshore, where no regulation exists.”

The debate highlights a broader clash over how these platforms should be categorized—financial tools or gambling products—and who should regulate them. With multiple bills now circulating in Congress, the outcome could reshape both the prediction market industry and the broader U.S. sports betting landscape.