U.S. Senators Adam Schiff (D-California) and John Curtis (R-Utah) have introduced the bipartisan Prediction Markets Are Gambling Act.
The legislation would amend the Commodity Exchange Act to prohibit entities regulated by the Commodity Futures Trading Commission (CFTC) — such as prediction market platforms like Kalshi and Polymarket’s U.S. operations — from listing or offering: Any contracts tied to sporting events like outcomes of NFL games, March Madness, Super Bowl, etc.
“Casino-style” event contracts; slot machines, video poker, blackjack, bingo, roulette, craps. It does not affect traditional sportsbooks like DraftKings or FanDuel, which are regulated at the state level under post-2018 PASPA repeal rules. The goal is to close what sponsors call a “backdoor” for unlicensed sports gambling under federal commodity rules, while preserving state authority over betting, protecting tribal gaming revenue, and ensuring consumer safeguards.
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Prediction markets have seen explosive growth, with billions traded on events like elections and major sports. States like Nevada won a temporary restraining order against Kalshi; Arizona filed charges argue these platforms undercut licensed sportsbooks and offer no tax revenue or state-level oversight.
Sponsors say the CFTC has been “greenlighting” these markets, violating the original intent of federal law that excludes sports gambling from commodity trading. Senator Curtis highlighted concerns about young people in Utah being exposed to addictive gambling products that should stay under state control. Senator Schiff emphasized protecting state consumer protections and tribal sovereignty.
Traditional sports betting stocks rose on the news, as the bill could reduce competition from prediction platforms. Platforms like Kalshi and Polymarket have responded by tightening rules against insider trading and abuse, but the bill adds significant regulatory pressure.
This is the first bipartisan Senate bill specifically targeting prediction market regulation. The bill is still in its early stages — it would need to pass the Senate, House, and be signed by the President to become law. It reflects ongoing tension between innovative prediction markets often praised for accurate forecasting, including elections and traditional regulated gambling.
The Commodity Futures Trading Commission (CFTC) is an independent U.S. federal agency established in 1974. Its primary mission is to promote the integrity, resilience, and vibrancy of the U.S. derivatives markets through sound regulation.
The CFTC oversees derivatives — financial instruments whose value is derived from an underlying asset or event. This includes: Futures contracts (agreements to buy or sell something at a future date at a predetermined price).
Swaps (customized agreements to exchange cash flows, greatly expanded after the 2008 financial crisis via the Dodd-Frank Act). The underlying assets can be: Traditional commodities. Financial instruments (e.g., interest rates, currencies, stock indexes).
Broader “events” in the case of event contracts including those offered on prediction markets. The CFTC does not regulate the spot (cash) markets for commodities themselves or securities. It also does not directly regulate traditional sports betting, which falls under state-level gaming laws.
The CFTC’s work focuses on several key areas: Market Oversight and Transparency. It registers and supervises trading platforms such as: Designated Contract Markets (DCMs) — exchanges where futures and event contracts trade (e.g., platforms like Kalshi that have registered as DCMs for prediction markets).
Swap Execution Facilities (SEFs).
Derivatives Clearing Organizations (DCOs) — central counterparties that guarantee trades and reduce counterparty risk. The agency requires real-time monitoring, reporting, and rules to prevent manipulation, fraud, and abusive practices.
It enforces rules on intermediaries to safeguard customer funds, ensure fair dealing, and maintain adequate capital and risk management. The CFTC investigates and prosecutes violations, including insider trading, spoofing, wash trading, and market manipulation. This applies to all derivatives, including event contracts on prediction markets.
Especially post-Dodd-Frank (2010), the CFTC oversees the massive swaps market to limit risks that could spill over into the broader economy. Exchanges can self-certify new contracts including event contracts if they meet statutory requirements, but the CFTC can review, block, or impose conditions if a contract is “contrary to the public interest” It also has authority over whether contracts are “readily susceptible to manipulation.”
Prediction markets often operate by offering event contracts — binary or multi-outcome derivatives that pay out based on whether a specific event occurs (e.g., “Will Candidate X win the election?” or “Will Team Y win the Super Bowl?”). Under the Commodity Exchange Act (CEA), the CFTC asserts exclusive jurisdiction over these when traded on registered DCMs.
Platforms like Kalshi and Polymarket have registered with the CFTC, treating these contracts as swaps or futures. This allows them to operate nationally under federal rules, even in states that ban sports gambling. The CFTC has recently: Reaffirmed its exclusive jurisdiction in court filings.
Issued guidance and an Advance Notice of Proposed Rulemaking on event contracts, emphasizing anti-manipulation rules, monitoring, and coordination with sports leagues. Maintained that sports event contracts can be listed if they comply with core principles, though this is hotly contested by states and traditional gaming interests.
This federal overlay is exactly why Senators Schiff and Curtis introduced the Prediction Markets Are Gambling Act — to explicitly prohibit CFTC-regulated platforms from offering sports-related or casino-style event contracts, arguing that such activity should remain under state gambling regulation rather than commodity derivatives rules.
The CFTC acts as the federal watchdog for derivatives to ensure markets are fair, transparent, and not used for abusive speculation or to evade other laws. Its role in prediction markets has grown rapidly as these platforms have expanded, creating the current tension with state authorities and the bipartisan bill you mentioned.