US bill targets crypto sports prediction markets

TLDR

U.S. lawmakers have introduced a bipartisan bill to ban sports betting contracts on regulated prediction markets, directly targeting platforms like Kalshi and Polymarket.

1. The Prediction Markets Are Gambling Act would bar CFTC-registered venues from offering sports and casino-style contracts, treating them as gambling rather than financial derivatives.
2. Crypto-linked prediction markets that rely on U.S. users or CFTC registration could lose a large portion of their volume or push activity to offshore and fully on-chain venues.
3. The key uncertainties are how far Congress takes the ban beyond sports, and how regulators and courts draw the line between financial event contracts and pure betting.

Deep Dive

1. What The Bill Actually Does

Senators Adam Schiff and John Curtis introduced the bipartisan Prediction Markets Are Gambling Act to amend the Commodity Exchange Act so that CFTC-registered firms cannot list sports or casino-style prediction contracts, explicitly naming platforms like Kalshi and Polymarket as targets. The bill would prohibit contracts tied to professional and college sports, as well as games such as blackjack, roulette, lotteries and similar products on CFTC venues, reinforcing that federal commodities law does not authorize sports betting as a derivative product. Lawmakers argue these contracts are effectively sports bets offered nationwide without going through state gambling regimes, and say Congress must close this "backdoor" into regulated gaming markets.

2. Why It Matters For Crypto Prediction Markets

Polymarket operates markets on-chain (for example on Polygon) while also seeking compliant U.S. access, and Kalshi positions itself as a CFTC-regulated derivatives venue; in both cases, sports contracts make up a large share of volume, reportedly around half for Polymarket and more than three quarters for Kalshi in recent weeks, according to Dune data cited by a CoinsKid community report. A ban on sports markets at CFTC venues would directly hit these revenue engines and likely push U.S. demand toward fully offshore or purely decentralized versions that are harder to police but also more vulnerable to aggressive enforcement against intermediaries and U.S. users. Some proposals and commentary also warn that once Congress codifies a sports ban, it may be easier politically to add other controversial event types later, such as politics or government actions, which could further restrict on-chain prediction niches.

3. What To Watch Next

For now this is an introduced bill, not law: it must move through Senate committees, potentially gain a House counterpart, and be reconciled with ongoing CFTC rulemaking on event contracts, which already treats many prediction markets as a distinct financial asset class. Parallel to Congress, several states including Nevada and Arizona have begun suing or temporarily blocking Kalshi and similar platforms, arguing that state gambling laws still apply even when the CFTC claims federal jurisdiction. The combination of federal legislation, CFTC guidance and state court rulings will determine whether prediction markets can remain under a derivatives-style framework, or whether they are pushed wholesale into the gambling bucket with stricter state-by-state rules and licensing.

Conclusion

The new U.S. bill frames sports prediction contracts on platforms like Kalshi and Polymarket as gambling rather than finance, threatening a core use case for crypto-linked prediction markets. How Congress, the CFTC and state courts resolve this jurisdictional fight will shape whether on-chain event markets become a regulated financial niche in the U.S. or a largely offshore, higher-risk activity for participants to approach with particular caution.