Prediction markets are coming under renewed bipartisan scrutiny in the US Senate as companies like Kalshi and Polymarket continue to clash with state authorities over the regulation of online betting platforms.
On Monday, US lawmakers introduced a bill that would prohibit federally regulated platforms from offering wagers on sporting events. If passed, the move would significantly impact prediction marketplaces, where billions of dollars have been traded on major events such as the Super Bowl and the NCAA’s March Madness.
The proposed legislation follows a wave of state-level actions aimed at tightening oversight of these platforms, even though they are currently regulated at the federal level. Just last week, a Nevada judge temporarily halted most of Kalshi’s operations in the state for two weeks after officials filed a lawsuit against the company.
At present, online prediction markets fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC). During the Trump administration, the agency maintained that it holds exclusive authority to regulate these platforms.
Adam Schiff, a Democratic senator from California who introduced the bill alongside Republican senator John Curtis of Utah, criticized the current regulatory approach. He said in a statement that the CFTC is “greenlighting these markets and even promoting their growth”.
“Sports prediction contracts are sports bets – just with a different name.” Schiff said in a statement. “It’s time for Congress to step in and eliminate this backdoor which violates state consumer protections, intrudes upon tribal sovereignty and offers no public revenue.”
In addition to banning sports-related wagers, the bill seeks to prohibit casino-style offerings such as virtual poker, slot machines and blackjack on these platforms. Curtis echoed concerns about federal oversight, stating that “addictive sports betting and casino-style gaming contracts” belong “under state control, not under federal regulators”.
Kalshi pushed back against the proposal, warning that tighter restrictions could drive users toward unregulated alternatives. In a statement, the company said that “banning sports on regulated prediction markets would just push this behavior offshore, where no regulation exists”.
“It’s clear this bill is motivated by casino interests that are threatened by competition. They’re more worried about protecting their monopolies than protecting consumers,” the company said. “Sports trading on regulated prediction markets offer a fairer choice to consumers, with no house that restricts winners and hooks people the more they lose.”
Polymarket and the CFTC did not immediately respond to requests for comment.
Sports betting in the US remained largely illegal until 2018, when the Supreme Court struck down a 1992 federal ban that had restricted commercial sports betting in most states. Since then, newer prediction market platforms—with fewer restrictions on age and event categories—have rapidly grown, now generating hundreds of millions of dollars in weekly trading volume.
These platforms allow users to place bets on a wide range of outcomes, from Oscar winners to geopolitical developments. Polymarket has even positioned itself as a news source, although a New York Times analysis found that the platform has shared hundreds of false and misleading posts on its social media channels.
Much of the resistance to prediction markets has come from state governments. Recently, Arizona’s attorney general filed criminal charges against Kalshi, accusing the company of facilitating election wagering and operating an illegal gambling business without proper licensing.
“Kalshi may brand itself as a ‘prediction market,’ but what it’s actually doing is running an illegal gambling operation and taking bets on Arizona elections, both of which violate Arizona law,” said Kris Mayes, Arizona’s attorney general. “No company gets to decide for itself which laws to follow.”
Nevada has also taken legal action, arguing that Kalshi must obtain a state license to offer wagering services. The state secured a temporary restraining order last week, preventing the company from operating locally until a hearing scheduled for April 3. The ruling bars Kalshi from offering contracts tied to sports, elections and entertainment, and also prohibits users under the age of 21 from accessing the platform.
“Prediction markets, to the extent they facilitate unlicensed gambling, are illegal in Nevada, and we have a statutory duty to protect the public. We want people in the state to wager safely at a licensed book,” said Mike Dreitzer, chair of the Nevada Gaming Control Board.
