Congress Moves To Ban Prediction Market Sports Bets

Kalshi got criminally charged in Arizona, banned in Nevada, and now Congress is coming for it too. Senators Adam Schiff and John Curtis introduced the “Prediction Markets Are Gambling Act” on Monday, the first bipartisan federal legislation targeting sports betting on prediction markets. The bill would ban any CFTC-registered platform from listing contracts tied to sporting events or offering casino-style games like poker, blackjack, or slots.

This lands in the same week that a Nevada judge blocked Kalshi from operating in the state, ruling its contracts are illegal gambling. Arizona filed 20 criminal charges against the company. Massachusetts banned it earlier this year. And Polymarket, meanwhile, opened a cocktail bar in Washington called “The Situation Room” where patrons bet on missile strikes over drinks, blocks from the CFTC headquarters. The industry is simultaneously being charged, banned, legislated against, and throwing parties.

The bill targets the specific loophole prediction markets have used to operate nationwide: because they register with the CFTC as designated contract markets, they fall under federal commodity regulation rather than state gambling law. This means platforms like Kalshi can offer what are functionally sports bets in all 50 states, including states like Utah where gambling is entirely illegal. Kalshi’s Super Bowl contract alone hit $1 billion in trading volume this year, a 2,700% increase year over year. A March Madness winner contract has already crossed $100 million.

The bill wouldn’t touch FanDuel or DraftKings, which are regulated at the state level. It specifically targets CFTC-registered platforms, making it a federal intervention into what has been a state-by-state fight. The Indian Gaming Association and California Nations Gaming Association both endorsed the bill, calling it a check on “federal overreach that the CFTC is fostering.”

Kalshi’s response: the bill is “motivated by casino interests that are threatened by competition” and would “push this behavior offshore, where no regulation exists.” That argument has some weight. If you ban sports contracts on regulated U.S. platforms, the volume migrates to crypto-native offshore exchanges with no oversight at all. Whether Congress cares about that distinction is another question.

There’s a wild card. Trump’s family has been increasingly invested in prediction market companies, according to CNN. Trump Jr. sits on Polymarket’s advisory board, and his venture capital firm has invested tens of millions in the company. Both the DOJ and CFPB dropped active investigations into Polymarket after Trump returned to the White House. Both Kalshi and Polymarket recently held preliminary talks with investors at roughly $22 billion valuations. Whether Trump would sign a bill that undermines companies his family is financially tied to is an open question that makes the legislation’s path forward genuinely uncertain.

The prediction market industry went from obscure to ubiquitous in under three years. It’s now valued in the tens of billions, facing criminal charges in one state, banned in another, under federal legislation in Washington, and hosting open bars near the White House. The regulatory environment is a perfect reflection of the product itself: nobody knows what the outcome will be, and everyone is placing their bets.