A cross-party Senate measure unveiled Monday aims to prohibit prediction markets from facilitating activities resembling sports wagering. The bill’s Republican and Democrat proponents expressed their desire for federal law concerning prediction markets to explicitly define which governance authority rests with states, rather than the federal Commodity Futures Trading Commission.
This new bill contributes to mounting state-level endeavors to curtail prediction markets. Last week, a Nevada judge issued a temporary injunction against industry leader Kalshi, preventing it from providing contracts linked to sporting events, while state prosecutors in Arizona initiated criminal proceedings for unlawful gambling against the firm.
The Trump administration has supported prediction market companies, which contend their offerings are akin to exchanging equities or raw materials, thereby placing them within the purview of the CFTC. Chairman Mike Selig has consistently upheld the CFTC’s exclusive oversight of prediction markets.
The new legislation, titled “The Prediction Markets Are Gambling Act,” is backed by Senators John Curtis (R-Utah) and Adam Schiff (D-California). It would modify federal law, prohibiting the presentation of “sports and casino-style event contracts” on commission-supervised platforms.
Tarek Mansour, Kalshi’s co-founder, responded to the enactment on social media platform X, stating it represented the “casino lobby actively engaged. … Prohibition merely drives such activities to unregulated international venues, where oversight is absent. This bill does not aim to safeguard patrons; rather, it seeks to shield monopolies.”
Mansour, among others, characterize contracts available through prediction markets as futures contracts on commodities, solely subject to federal governmental oversight. However, numerous states are disputing this assertion in legal forums, contending it constitutes a type of wagering and thus falls under state jurisdiction.
Arizona initiated criminal proceedings against Kalshi on March 16, marking it as the inaugural state to do so. A twenty-count complaint was lodged by state prosecutors in Maricopa County, alleging Kalshi received illicit wagers on sports and elections, contravening state statutes.
On Friday, a Nevada district court issued an interim prohibitive directive of fourteen days against Kalshi, favoring state gaming regulators. The subsequent court session for this matter is set for April 3.
Kalshi and its co-founders, Mansour and Luana Lopes Lara, were designated as respondents in a collective legal action lodged in Georgia on March 20, which asserted they offered sports event contracts with malicious intent, fully aware of their unlawful nature.
Notwithstanding the ongoing oversight dispute, the prediction market sector is flourishing. Major League Baseball, last week, revealed a collaboration with Polymarket and entered into a data-exchange pact with the CFTC. It is reported that Kalshi has also secured $1 billion in fresh capital.