WASHINGTON (TNND) — Prediction market apps that let users wager on outcomes ranging from sports and politics to military action are drawing fresh scrutiny on Capitol Hill, where lawmakers are pushing for new federal rules and restrictions.
In the Senate, Sen. Adam Schiff, D-Calif., and Sen. John Curtis, R-Utah, are backing the “Prediction Markets are Gambling Act,” which would ban prediction markets from offering sporting events. (TNND)
Platforms such as Kalshi and Polymarket allow Americans to buy what the companies describe as “event contracts,” a structure that has helped prediction markets evade state gambling regulations under oversight tied to the federal Commodity Futures Trading Commission. That has raised questions among some members of Congress about how prediction markets differ from sports gambling and whether they are being regulated appropriately.
Two different bipartisan bills have been introduced in response.
In the Senate, Sen. Adam Schiff, D-Calif., and Sen. John Curtis, R-Utah, are backing the “Prediction Markets are Gambling Act,” which would ban prediction markets from offering sporting events.
“We’re not banning sports betting, we’re just simply putting it in the right places to be regulated. And one of those places is in the state. Utah does not allow gambling in any form, so it’s one of the things that’s real important to me is that we don’t take this control away from Utah,” Curtis told CNBC.
The debate has intensified after Polymarket recently announced a partnership with Major League Baseball, prompting criticism from some lawmakers. Rep. Alexandria Ocasio-Cortez, D-N.Y., said, “Pervasive gambling is not good for society. It turns life into a casino, traps people in addiction & debt, surges domestic violence, and fosters manipulation.”
A separate bipartisan proposal would bar members of Congress, the president and members of the executive branch from participating in prediction markets tied to politics.
Concerns about potential insider trading have also been raised following reports of new accounts making hundreds of thousands of dollars tied to what was described as perfect timing around Iran military strikes. There was a $400,000 payout after former Venezuelan President Nicolas Maduro was captured and brought to the United States.
“When it is completely unregulated like this, you can have vast amounts of insider trading. People who have particular insights, either because they’re government officials or the athletes themselves,” Schiff told CNBC.
Kalshi announced this week it would preemptively block politicians and athletes from betting on their own campaigns and sporting events. Polymarket also said it would be clamping down on insider trading. But some members of Congress say those steps are not enough and are pushing federal legislation.
