Two U.S. senators introduced a bipartisan bill on Monday aimed at banning sports futures on prediction markets.
Senators Adam Schiff, a Democrat from California, and John Curtis, a Utah Republican, introduced the “Prediction Markets Are Gambling Act” which, if passed and enacted, would prevent “Commodity Futures Trading Commission (CFTC)-registered entities from listing any prediction contract that resembles a sports bet or casino-style game.”
Traders currently can buy and sell contracts, based on predictions via markets like Kalshi and Polymarket, even in states that have not legalized sports betting. Those states include major markets such as Texas and Schiff’s home state of California.
Prediction contracts differ from traditional sports bets in that traders are not putting their money up against “the house” as betters would with a sportsbook that sets the odds for a specific outcome. The value of prediction contracts is determined by traders. Correct predictions will cash out, but traders can also sell their contracts for a profit, like a stock.
These prediction markets are federally regulated like financial exchanges, which means they can operate in all 50 states. Traditional sports bets are not federally regulated and are only legal in 39 states, as well as Washington, D.C.
Schiff called prediction contracts sports betting with a different name.
“And yet, these contracts have been offered in all 50 states in clear violation of state and federal law,” Schiff said in a statement. “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, intrudes upon tribal sovereignty, and offers no public revenue.”
Said Curtis: “Our bipartisan legislation clarifies regulatory jurisdiction, ensuring that states can maintain their authority over sports betting and casino gaming. The Prediction Markets Are Gambling Act is about respecting states’ authority, protecting families, and keeping speculative financial products out of spaces where they don’t belong.”
Prediction markets have been on the rise under the current presidential administration, with some sportsbooks launching their own in recent months. The Biden administration had banned Polymarket from operating in the U.S.
Other politicians have been critical of prediction markets.
Rep. Dina Titus, a Democrat from Nevada, said they “should not be able to circumvent state gaming laws.”
This also isn’t the first legislation aimed at regulating prediction markets. Schiff earlier this month introduced the “DEATH BETS Act,” which would prohibit any CFTC-registered entity from listing contracts on terrorism, assassination, war or an individual’s death.
That bill was introduced after markets like Kalshi allowed users to trade on events like whether Iran’s Ali Khamenei would be “out as Supreme Leader.” Kalshi had $54 million in trading volume before it was paused, according to Schiff’s office.
This article originally appeared in The Athletic.