MLB, NBA Won't Cut It! U.S. Bipartisan Lawmakers Take Action, Propose Legislation to Ban Prediction Market Sports Betting

U.S. Senate proposal aims to ban sports and casino-style prediction contracts, intensifying regulatory battles between state and federal authorities, with Kalshi and Polymarket facing multi-state lawsuits.

According to The Wall Street Journal, bipartisan U.S. senators will introduce a new bill on Monday to prohibit federally regulated prediction market platforms from offering contracts related to “sports events” and “casino-style games,” marking the Senate’s first attempt to restrict the rapidly expanding prediction markets.

The bill is sponsored by Democratic Senator Adam Schiff and Republican Senator John Curtis, advocating a comprehensive ban on prediction markets regulated by the U.S. Commodity Futures Trading Commission (CFTC)—including platforms like Kalshi and Polymarket—on any contracts related to sports events.

Furthermore, the ban would extend to so-called “casino-style products,” including slot machines, blackjack, poker, and bingo-related prediction markets.

Adam Schiff stated, “The CFTC not only greenlights these markets but also promotes their growth.”

He believes Congress should eliminate this regulatory loophole, which “violates state consumer protection laws, infringes on tribal sovereignty, and contributes nothing to government revenue.”

John Curtis added, “Too many young people in Utah are exposed to addictive sports betting and casino-style game contracts, which should be regulated by state governments, not federal agencies.”

The introduction of this legislative proposal comes amid escalating disputes over the regulatory authority over prediction markets among U.S. regulators, states, and industry players.

Although platforms like Kalshi and Polymarket offer binary contracts across various fields—cryptocurrency, political elections, climate change, and pop culture—the majority of trading activity remains heavily focused on sports. This has led to fierce competition with traditional sports betting giants like FanDuel and DraftKings.

The CFTC maintains that event contracts are inherently part of the derivatives market and thus fall under its exclusive jurisdiction. In legal filings this February, the CFTC stated that states have no authority to regulate prediction market platforms.

However, states are fighting back. Nevada recently obtained a temporary restraining order to block Kalshi from offering prediction contracts related to sports, elections, and entertainment. Arizona has even filed criminal charges against Kalshi’s parent company, accusing it of operating illegal gambling without a license. Kalshi strongly denies these allegations and has urged Arizona to withdraw the lawsuit.

The legal battle has now spread across multiple jurisdictions. Massachusetts and Michigan have filed lawsuits against Kalshi; to protect itself, Polymarket also sued Michigan earlier this month, attempting to challenge the state’s strict gambling laws. Additionally, the Ninth Circuit Court of Appeals recently rejected Kalshi’s emergency motion to stay enforcement of Nevada’s case, effectively paving the way for further restrictions by other states.

Despite regulatory uncertainties, the prediction market sector continues to attract investment. Reports suggest Kalshi and Polymarket are seeking funding at a valuation of $20 billion. Major Wall Street firms like Susquehanna and Jump Trading are acting as market makers for Kalshi, and data services provider Tradeweb has begun data collaborations with the platform.

While some sports organizations express concerns about potential manipulation and insider trading in prediction markets, Major League Baseball (MLB) recently reached an licensing agreement with Polymarket, allowing the platform access to league data under strict cooperation and monitoring to prevent suspicious betting activities.

Related reading:
Classic World Baseball Classic just concluded! MLB partners exclusively with Polymarket and collaborates with CFTC to prevent match-fixing

• This article is reprinted with permission from “BlockCast”
• Original title: “Bipartisan U.S. Senators Join Forces to Legislate Against ‘Prediction Markets’ and Sports Gambling”
• Original author: Block Sister MEL