New Bipartisan Bill Aims to Ban Sports Betting on Prediction Markets
According to The Wall Street Journal, a group of bipartisan senators is proposing a law to prohibit sports betting on platforms like Kalshi and Polymarket. This initiative comes in response to significant growth in prediction markets related to sports betting and ongoing debates about the legality of such actions at the state level.
Senators Adam Schiff (D-CA) and John Curtis (R-UT) are leading this effort, representing different political perspectives. The proposed legislation is designed to bar prediction markets overseen by the Commodities Futures Trading Commission (CFTC) from providing markets tied to sports and casino activities. Curtis expressed concerns about young people in Utah being exposed to potentially addictive gaming options that should be regulated at the state level rather than federally.
A representative from Kalshi commented to The Block that the proposed law could drive these markets offshore, where regulations are virtually non-existent. The spokesperson suggested that the bill primarily aims to safeguard the traditional casino industry, which is facing stiff competition from the nascent prediction market sector.
This legislative push doesn’t arise in a vacuum, as there are numerous legal disputes ongoing between various states and prediction market platforms about the legality of offering sports markets. States involved in these disputes include Nevada, Massachusetts, Michigan, Connecticut, and Illinois. Recently, the Arizona attorney general’s office filed new charges against Kalshi.
Each state has distinct regulations relating to sports betting, and many state officials view prediction markets as circumventing these laws. Moreover, CFTC Chair Mike Selig has recently claimed jurisdiction over these markets, which has faced considerable backlash, including criticism from Utah Governor Spencer Cox.
Established sportsbooks like DraftKings and FanDuel have also ventured into prediction markets with platforms designed to offer sports contracts primarily in states where traditional sports betting is illegal, cleverly maneuvering through CFTC regulations. The surge in prediction market activity has been notable, with it accounting for 76.1% of trading volume on Kalshi, as reported by DeFi Rate.
Despite these ongoing concerns, prediction platforms are working on enhancing market integrity, with Kalshi recently taking action against users involved in insider trading. Additionally, Polymarket has announced new regulations aimed at maintaining integrity within its platform. A report by the Federal Reserve has also highlighted the potential utility of prediction markets in assessing future economic and market developments.
