Senators draft bill banning sports prediction markets

TLDR

US senators have introduced a bipartisan bill that would bar regulated prediction markets from offering sports and casino-style bets, directly challenging platforms like Kalshi and Polymarket.

1. The Prediction Markets Are Gambling Act would prohibit CFTC registered platforms from listing sports and casino-style event contracts, framing them legally as gambling products.
2. Sports markets are the main revenue driver for Kalshi and Polymarket, so a ban would significantly shrink their business and could push sports betting flow to state sportsbooks or offshore crypto venues.
3. The bill is only a proposal for now, and its path will interact with ongoing state lawsuits and CFTC rulemaking, which will determine how far any clampdown ultimately reaches into crypto prediction markets.

Deep Dive

1. What The Bill Actually Does

Senators Adam Schiff (D CA) and John Curtis (R UT) introduced the bipartisan Prediction Markets Are Gambling Act, which amends the Commodity Exchange Act to bar CFTC registered firms from listing sports and casino-style event contracts, including pro and college sports, blackjack, roulette, lotteries and similar products. The core idea is to say that these contracts are legally indistinguishable from sports bets and should be under state gambling law, not federal derivatives oversight.

The bill explicitly targets CFTC regulated exchanges such as Kalshi and the US facing version of Polymarket, which currently operate as derivatives venues under federal rules rather than as state licensed sportsbooks. Political and economic contracts are not the immediate focus, though the text could become a template for broader limits if Congress chooses to extend it later, as outlined in one summary of the act and its amendments to the Commodity Exchange Act.

2. Impact On Prediction And Crypto Markets

Sports contracts dominate these businesses. Recent data cited by one analysis shows sports made up about 47.7% of Polymarket weekly volume and 78.8% for Kalshi, with weekly notional volumes of $1.2 billion and $2.6 billion respectively and combined valuations near $20 billion. Removing those markets would cut a large share of activity and fee revenue, which matters for both their equity value and market maker participation.

For crypto users, there are two angles. First, Polymarket itself runs on Polygon, so a big reduction in US facing sports markets could reduce onchain volume and fees even if the underlying smart contracts remain live for non US users. Second, if regulated US platforms lose sports volume, more activity may migrate to state licensed books like DraftKings or to fully offshore and unregulated onchain markets, which increases legal and counterparty risk for users who chase that flow.

3. What To Watch Next

The bill is still at an early stage. It must pass the Senate, clear the House and be signed by the president, so there is a meaningful chance it is revised or stalls. In parallel, states such as Nevada and Arizona are already suing Kalshi and others, winning temporary orders that block sports, election and entertainment markets until courts decide whether they violate state gambling laws.

At the federal level, the CFTC recently issued guidance treating event contracts as a financial asset class and opened a rulemaking process on how the Commodity Exchange Act should apply, while Schiff separately introduced the DEATH BETS Act to ban contracts on death, war and terrorism. How these regulatory tracks and the new bill fit together will shape whether only sports markets are carved out, or whether Congress and regulators move toward a broader framework that also hits political and economic crypto prediction markets.

Conclusion

Lawmakers are not trying to kill prediction markets outright, but they are moving to strip sports and casino style betting out of federally regulated venues and push that activity back under state gambling regimes. For crypto linked prediction platforms, the near term risk is a sharp reduction in US facing sports volume and more legal complexity, while the longer term question is whether similar logic is extended to other kinds of event markets that today sit at the intersection of crypto, trading and betting.