Bipartisan lawmakers prepare legislation to prohibit sports wagers on prediction platforms: WSJ
New bipartisan legislation in the Senate would prohibit prediction markets from offering sports wagers and casino-type contracts, according to reports.
According to a Monday report from the Wall Street Journal, US Senators John Curtis and Adam Schiff are anticipated to put forward bipartisan legislation on Monday that would prohibit prediction markets under Commodity Futures Trading Commission (CFTC) oversight from offering sports betting and "casino-style" contracts.
"Too many young people in Utah are getting exposed to addictive sports betting and casino-style gaming contracts that belong under state control, not under federal regulators," Senator Curtis, one of the bill's co-sponsors, told the WSJ.
Should the legislation be introduced as the report indicates, it would contribute to an expanding effort in Washington to restrict certain types of prediction market contracts. The report further highlights the increasing regulatory oversight facing prediction markets, which intensified following fresh insider trading worries triggered by the US-Israeli war with Iran.
Schiff previously introduced the DEATH BETS Act on March 10, legislation designed to prevent CFTC-regulated prediction markets from offering contracts linked to war, terrorism, assassination and the death of individuals.
Sports markets drive trading volume
Prediction market platforms see a significant portion of their trading activity generated by sports betting. According to Dune data, sports-related contracts represented 47.7% of Polymarket's weekly notional volume and 78.8% for Kalshi during the previous week.
The weekly notional trading volume generated by sports betting reached $1.2 billion for Polymarket and $2.6 billion for Kalshi.
State and federal lines blur
Regulatory scrutiny has also grown more intense beyond Congress. The CFTC released a staff advisory on March 12 that designated event contracts on prediction markets as a "financial asset class."
Additionally, the commodities regulator put forth an Advanced Notice of Proposed Rulemaking, soliciting public input on how the Commodity Exchange Act (CEA) should be applied to prediction markets. Both Polymarket and Kalshi operate under CFTC regulation as Designated Contract Markets (DCM).
Although CFTC Chair Michael Selig asserted the CFTC held "exclusive jurisdiction" over prediction markets, that assertion faced a challenge in a March 9 ruling by an Ohio judge, who stated that Kalshi had not demonstrated the CEA "would necessarily preempt Ohio's sports gambling laws," nor that these sports betting contracts would be subject to the "exclusive jurisdiction" of the CFTC.
Last Friday, a Nevada judge issued a temporary 14-day injunction preventing Kalshi from providing sports, election and entertainment event contracts within the state, determining that regulators had a reasonable likelihood of prevailing in their argument that these markets violated Nevada gambling law.
Cointelegraph approached the senators for comment and a copy of the draft bill.