US Senators Propose Bill to Ban Sports Betting Contracts on Prediction Markets

Quick Summary

• Bipartisan Senate bill aims to ban sports-related contracts on US prediction markets.
• Legislation targets platforms regulated by the Commodity Futures Trading Commission (CFTC).
• First coordinated Congressional move to directly address the intersection of sports betting and prediction markets.
• Heightened regulatory focus comes amid surging interest in alternative online betting platforms.

What Happened

A group of US senators—spearheaded by Adam Schiff (D-CA) and John Curtis (R-UT)—introduced legislation that seeks to halt the offering of sports-related contracts on prediction market platforms under CFTC oversight. Announced on March 24, 2026, the bill forbids these platforms from listing any contracts based on the outcomes of sporting events, marking a significant move to delineate boundaries between traditional regulated sports betting and newer prediction market offerings.

This proposal constitutes the first coordinated Congressional action to directly govern the rapidly expanding sector where prediction markets and online sports wagering increasingly overlap. Currently, platforms such as PredictIt and Kalshi operate in a regulated gray area, allowing users to buy and sell contracts tied to the outcome of future events—from elections and economic indicators to, potentially, sports outcomes.

Why It Matters

The introduction of this legislation underscores mounting concern in Washington over the blurred lines between online gambling and financial speculation. In recent years, the US sports betting market has exploded, reaching $132 billion in total handle since the Supreme Court struck down PASPA in 2018. At the same time, prediction markets—originally established as tools for information aggregation—have diversified their offerings and drawn attention from both financial regulators and the gambling industry.

Allowing prediction market platforms to offer sports-based contracts effectively enables users to bet on sports with structures that closely resemble those of traditional bookmakers. This hybridization raises regulatory red flags: prediction markets are subject to different oversight than licensed sportsbooks, potentially circumventing state gambling laws, tax regimes, and player protections. The bipartisan bill thus reflects a desire to avoid regulatory arbitrage, in which operators could skirt stringent gambling rules by passing off bets as “financial contracts.”

Congressional scrutiny comes at a time when the CFTC's regulatory remit is also under review. Historically, the Commission has issued no-action letters for prediction markets serving academic and research purposes. However, as platforms pursue commercial expansion—including sports-related products—regulators are compelled to clarify the distinction between permissible prediction contracts and unauthorized betting.

Industry Context

The convergence of prediction markets and sports betting is not an isolated phenomenon. Over the past two years, the emergence of platforms allowing users to speculate on non-financial events has drawn significant venture capital, media attention, and regulatory heat. Operators argue that prediction markets provide valuable price signals and a novel way for users to participate in information markets. Detractors counter that, devoid of rigorous controls and responsible gambling safeguards, these markets expose consumers to risks akin to unregulated gambling.

State governments—with an increasing share of tax revenues tied to sanctioned sports wagering—also have a vested interest in maintaining clear lines between regulated gambling and alternative models. The new legislation directly addresses these interests by preventing CFTC-regulated entities from intruding upon domains reserved for licensed sportsbooks. For industry stakeholders, the bill’s advancement signals that Congressional leaders are taking a proactive stance on a regulatory gray area, rather than waiting for piecemeal legal challenges or enforcement actions.

Regulatory Background

The Commodity Futures Trading Commission plays a complex role in the oversight of prediction markets. While the CFTC typically governs derivatives and commodities trading, it has, in some cases, permitted the existence of non-traditional event-based markets through limited no-action relief. This approach has been tested repeatedly as platforms increase the commercial scope and breadth of their offerings.

For now, state-level regulation governs mainstream sports betting, with each jurisdiction developing its own licensing frameworks, responsible gaming protocols, and tax structures. The federal government’s involvement—particularly via the CFTC—has primarily centered on delineating where financial products stop and gambling begins. The pending legislation aims to solidify this boundary, barring prediction markets from using federal regulatory cover to expand into the lucrative US sports betting sector without adhering to state-level regulation.

For more on how different jurisdictions approach online casino regulation, readers may refer to our comprehensive casino regulation guide.

What Happens Next

The bill will proceed to committee hearings, where it will be subject to scrutiny from lawmakers, industry stakeholders, and public interest groups. Stakeholders across prediction markets, sports betting operators, and legal experts are expected to provide testimony. If approved, the legislation could be signed into law later in the current Congressional session, setting a new national standard on how prediction markets can intersect with sports betting in the US.

Sources

• Yogonet - Legislation

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