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A bipartisan pair of U.S. senators introduced legislation Monday aimed at dismantling what they describe as a federal “backdoor” for illegal gambling, specifically targeting sports and casino-style contracts on prediction platforms like Kalshi and Polymarket.
The Prediction Markets Are Gambling Act, introduced by Sens. Adam Schiff (D-Calif.) and John Curtis (R-Utah), would amend the Commodity Exchange Act to explicitly prohibit the Commodity Futures Trading Commission (CFTC) from allowing contracts tied to sporting events or “casino-style” games, such as digital poker and blackjack.
The bill marks the first major bipartisan effort to curb an industry that has exploded in 2026, with Super Bowl trading volume alone surpassing $1 billion this year.
Closing the federal ‘backdoor’ on sports betting
At the center of the legislative push is the argument that “event contracts” are functionally indistinguishable from traditional wagering.
“Sports prediction contracts are sports bets — just with a different name,” Schiff said in a statement to The Guardian.
“Rather than enforce the law, the CFTC is greenlighting these markets and even promoting their growth. It’s time for Congress to step in and eliminate this backdoor which violates state consumer protections and intrudes upon tribal sovereignty.”
Curtis, whose home state of Utah has a constitutional ban on gambling, expressed concern over the “addictive” nature of these products. He argued that the platforms are currently operating in a regulatory gray area that bypasses state-level oversight.
State vs. federal: The fight for regulatory control
The Senate bill follows a wave of aggressive enforcement actions by state authorities:
- Arizona: State Attorney General Kris Mayes recently filed a 20-count criminal complaint against Kalshi, alleging the platform is running an unlicensed gambling operation.
- Nevada: A state court judge recently granted a temporary restraining order against Kalshi, blocking its sports-related operations for 14 days.
- Tribal Sovereignty: The Indian Gaming Association (IGA) and the American Gaming Association (AGA) have both endorsed the bill, arguing that the CFTC’s current stance undermines tribal and state regulatory regimes.
Kalshi and Polymarket respond with new guardrails
The legislation highlights a deepening divide between federal and state views. Under the Trump administration, CFTC Chairman Michael Selig has favored a policy of “lawful innovation,” arguing that federal oversight should preempt state gambling laws for these types of financial derivatives.
However, the platforms are already feeling the heat. On Monday, both Kalshi and Polymarket announced new internal “guardrails”:
- Kalshi said it would begin proactively blocking athletes, coaches, and referees from trading on markets associated with their own sports.
- Polymarket released enhanced integrity rules to prevent insider trading, specifically targeting users with confidential information or the power to influence outcomes.
The path ahead: A pivot toward pure economics?
Supporters of prediction markets argue that the platforms provide valuable economic data and forecasting tools. Critics, including the bill’s sponsors, point to controversial “death contracts”—bets on assassinations or military outcomes—as evidence that the markets lack social utility.
If passed, the bill would force prediction markets to pivot away from the high-volume sports and entertainment sectors that have fueled their recent growth, potentially restricting them to narrow economic and weather-related forecasting.
