Bipartisan Bill Seeks to Ban Sports Prediction Contracts
A new bipartisan legislative proposal aims to shut down a rapidly growing segment of the prediction market industry. U.S. Senators Adam Schiff (D-CA) and John Curtis (R-UT) introduced the Prediction Markets Are Gambling Act on Monday, targeting firms like Kalshi and Polymarket that offer contracts on sporting events and casino-style games.
The bill would amend the Commodity Exchange Act to explicitly prohibit the listing or trading of event contracts tied to professional and collegiate sports, as well as games such as blackjack, roulette, and lotteries. Crucially, the legislation clarifies that federal law would not preempt existing state gambling prohibitions, returning ultimate authority over these products to state governments.
Senator Curtis framed the measure as a defense of state sovereignty and public welfare. “Too many young people in Utah are getting exposed to addictive sports betting and casino-style gaming contracts that belong under state control, not under federal regulators,” he stated. “The Prediction Markets Are Gambling Act is about respecting states’ authority, protecting families, and keeping speculative financial products out of spaces where they don’t belong.”
Senator Schiff argued that the Commodity Futures Trading Commission (CFTC) has misinterpreted its mandate, allowing what are functionally gambling products to flourish outside state regulatory frameworks. “Rather than enforcing the law, 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, which violates state consumer protections, intrudes upon tribal sovereignty, and offers no public revenue.”
The CFTC’s Federal Stance and State Legal Challenges
This legislative push intensifies an existing regulatory conflict. Since the 2018 Supreme Court decision (Murphy v. NCAA) that allowed states to legalize sports betting, states have built licensed, taxed markets generating substantial public revenue. Prediction markets, classified by the CFTC as commodity-linked financial instruments, operate under federal oversight and have avoided state licensing requirements and taxation.
States, tribal nations, and gaming commissions have objected fiercely, arguing that platforms like Kalshi and Polymarket offer products indistinguishable from sports bets but without contributing to state tax coffers or adhering to local consumer safeguards. This has sparked a wave of lawsuits, with active legal challenges in states like Nevada and Massachusetts. The companies’ primary defense rests on the CFTC’s regulatory authority.
The CFTC has actively reinforced this federal position. In recent court filings responding to state challenges, the agency asserted that its Congressionally granted authority over commodity event contracts preempts conflicting state laws. A spokesperson for Chair Michael Selig emphasized that the commission’s jurisdiction is clear and intended to create a unified national market for these contracts.
Industry Growth Amid Legal Uncertainty
The debate surrounds a sector experiencing explosive growth. Combined trading volume across prediction markets reached an estimated $44 billion in 2025, with industry analysts projecting it could surpass $50 billion in the current year. Sports-related contracts have been the dominant driver of this activity, representing a primary revenue source for leading platforms.
This growth trajectory contrasts sharply with the stable, state-regulated sports betting industry, which generated billions in tax revenue for states in 2024. The emergence of federally sanctioned alternatives that bypass state systems has created a direct financial and jurisdictional conflict, fueling the bipartisan effort in Congress to redraw the regulatory lines.
Clash Over Jurisdiction, Revenue, and Tribal Sovereignty
The core of the dispute extends beyond technical definitions of “gambling” versus “financial instrument.” It encompasses significant policy concerns: the erosion of state control, the loss of potential tax revenue, and the impact on tribal gaming compacts, which Senator Curtis specifically noted.
Governors and state gaming regulators argue that the CFTC’s approach undermines the regulatory regimes they established post-2018, which include responsible gambling measures and dedicated funding for public programs. Tribal nations assert that prediction markets infringe on their exclusive gaming rights
