Senators Introduce Bill to Limit Betting on Prediction Market Platforms
In a move that could significantly affect prediction market platforms, Senators Adam Schiff (D-CA) and John Curtis (R-UT) introduced a bipartisan bill on Monday aimed at prohibiting users from wagering money on sports events or participating in casino-like games on platforms such as Kalshi and Polymarket. The proposed legislation, however, would not extend to platforms like FanDuel and DraftKings which are governed by individual state gambling laws rather than federal ones. Here
Sports Prediction Contracts: Sports Bets by Another Name?
Senator Schiff expressed his concerns about the current state of affairs, stating, “Sports prediction contracts are sports bets — just with a different name. And yet, these contracts are currently offered in all fifty states in clear violation of state and federal law.”
Since the 2018 Supreme Court ruling that allowed states to legalize sports betting, gambling has become increasingly prominent in American society. Data shows that total sports wagers have grown exponentially, from $4.9 billion in 2017 to a staggering $121.1 billion in 2023. Several major professional sports leagues now have contracts with gambling companies, even as some star athletes face potential imprisonment for alleged involvement in money laundering schemes.
Federal Versus State Jurisdiction Over Sports Betting
Prediction markets like Kalshi and Polymarket operate under the Commodity Futures Trading Commission (CFTC), enabling Senators Schiff and Curtis to address them under federal jurisdiction. They argue that there’s little practical difference between betting on sports via federally or state-regulated apps. For instance, Kalshi’s Super Bowl trading volume reached over $1 billion this year, marking a 2700% increase year-over-year.
“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,” Curtis said, highlighting the risks associated with gambling.
Recent research from the University of California San Diego’s Qualcomm Institute and School of Medicine supports Curtis’ concerns, showing a significant increase in online searches for help with gambling addiction following the introduction of online sportsbooks.
Industry Reaction to the Proposed Bill
Responding to the proposed bill, Kalshi spokesperson Elisabeth Diana told TechCrunch that the legislation would stifle competition and push users towards offshore prediction markets. “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,” Diana stated. Polymarket, on the other hand, has not yet commented on the matter.
Legal Challenges for Kalshi
Kalshi, one of the platforms potentially affected by the proposed bill, has been grappling with other legal challenges. The app is currently temporarily banned in Nevada, and is facing criminal charges in Arizona.
In conclusion, the proposed bill could mark a significant turning point in regulating prediction markets and could reshape the landscape of sports betting in America.
