A bipartisan Senate bill introduced Monday seeks to ban prediction markets from allowing transactions that mimic sports betting. The bill's Republican and Democrat sponsors said they want federal law regarding prediction markets to clearly delineate which regulatory powers belong to states as opposed to the federal Commodity Futures Trading Commission.
The new bill adds to growing efforts at the state level to clamp down on prediction markets. Last week, a Nevada judge temporarily blocked industry leader Kalshi from offering sports-related event contracts, while state prosecutors in Arizona filed illegal-gambling criminal charges against the company.
The Trump administration has defended prediction market companies, which argue that their products are similar to trading stocks or commodities, putting them under CFTC jurisdiction. Chairman Mike Selig has repeatedly defended the CFTC's sole regulatory authority over prediction markets.
The new legislation, dubbed "The Prediction Markets Are Gambling Act," is sponsored by Sens. John Curtis, R-Utah, and Adam Schiff, D-California. It would amend federal law so that "sports and casino-style event contracts" may not be offered on platforms regulated by the commission.
Tarek Mansour, Kalshi's co-founder, reacted to the legislation on social media platform X, writing that it was the "casino lobby hard at work. ... Banning just pushes this offshore, where no regulation exists. This bill isn't about protecting consumers; it's about protecting monopolies."
Mansour, among others, describes contracts offered on prediction markets as commodity market swaps, which only the federal government may regulate. But several states are challenging that premise in court, arguing that this is a form of gambling and, therefore, subject to state regulation.
On March 16, Arizona became the first state to bring criminal charges against Kalshi. State prosecutors filed a 20-count complaint in Maricopa County accusing Kalshi of accepting illegal bets on sports and elections in violation of state laws.
On Friday, a Nevada district court granted state gaming regulators a 14-day temporary restraining order against Kalshi. The next hearing in the case is scheduled for April 3.
A class action complaint filed on March 20 in Georgia named Kalshi and its co-founders, Mansour and Luana Lopes Lara, as defendants, claiming that they listed sports event contracts in "bad faith with full knowledge of these illegalities."
Despite the regulatory battle, business is booming for prediction markets. Last week, Major League Baseball announced a partnership with Polymarket and signed an information-sharing agreement with the CFTC. Reportedly, Kalshi has also raised $1 billion in new financing.
