US Senators Adam Schiff and John Curtis are expected to introduce a bipartisan bill that would prohibit sports betting and casino-style contracts from being offered on prediction markets regulated by the Commodity Futures Trading Commission (CFTC), according to a report from the Wall Street Journal. The legislation would shift oversight of such contracts away from federal regulators and back to state authorities. Curtis, one of the bill’s co-sponsors, cited concerns about young people being exposed to addictive gambling products as a key motivation for the measure.
The proposed bill adds to a broader legislative effort in Washington targeting specific categories of prediction market contracts. In March, Schiff introduced the DEATH BETS Act, a separate measure seeking to ban CFTC-regulated prediction markets from listing contracts linked to war, terrorism, assassination, and individual deaths. The latest proposal reflects growing unease among lawmakers over the expanding scope of these platforms, which have drawn renewed scrutiny following insider trading concerns connected to the US-Israeli conflict with Iran.
Sports-related contracts represent a substantial share of trading activity on major prediction market platforms. According to data from Dune, sports contracts accounted for 47.7% of weekly notional volume on Polymarket and 78.8% on Kalshi in the most recent reporting period. In absolute terms, sports betting generated $1.2 billion in weekly notional trading volume for Polymarket and $2.6 billion for Kalshi.
Regulatory pressure has also been building outside of Congress. On March 12, the CFTC issued a staff advisory classifying event contracts on prediction markets as a financial asset class. The agency also submitted an Advanced Notice of Proposed Rulemaking, inviting public comment on how the Commodity Exchange Act (CEA) applies to prediction markets. Both Polymarket and Kalshi currently operate as Designated Contract Markets (DCM) under CFTC regulation.
The question of federal versus state jurisdiction over prediction markets has recently been tested in the courts. CFTC Chair Michael Selig has asserted that the agency holds exclusive jurisdiction over these platforms, but an Ohio judge challenged that position in a March 9 ruling, finding that Kalshi had not demonstrated the CEA would necessarily override Ohio’s sports gambling laws. The ruling cast doubt on the breadth of the CFTC’s claimed authority in this area.
State-level legal challenges have also emerged in Nevada, where a judge temporarily blocked Kalshi from offering sports, election, and entertainment event contracts for a period of 14 days. The court found that regulators were reasonably likely to succeed in arguing that Kalshi’s offerings violated Nevada gambling law. The ruling adds to a series of legal and regulatory obstacles the platform faces as it seeks to expand its prediction market services across the United States.
The combined legislative and judicial developments signal a period of significant uncertainty for the prediction market industry. Platforms like Kalshi and Polymarket, which have grown rapidly in recent years, now face potential restrictions on some of their most actively traded contract categories. Cointelegraph reached out to both senators for comment and a copy of the draft bill but had not received a response at the time of publication.
Originally reported by CoinTelegraph.
