According to a report in The Wall Street Journal, a bipartisan pair of U.S. senators is introducing legislation to ban sports betting on prediction markets platforms like Kalshi and Polymarket. The legislation follows massive growth experienced by prediction markets due to the sports betting category and increasing controversy over whether such activity is even legal at the state level.
Senators Adam Schiff (D-CA) and John Curtis (R-UT) are the two lawmakers from opposing sides of the aisle behind the legislation. Specifically, the bill would prevent prediction markets regulated by the Commodities Futures Trading Commission (CFTC) from offering markets related to sports and other casino-related events. “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 told the Journal.
A spokesperson for prediction market Kalshi told The Block that the legislation would have the side effect of pushing these kinds of markets offshore where “no regulation exists” and the real point of the bill is to protect the casino industry, which is threatened by increased competition from the emerging prediction market sector.
Of course, this new legislation is not coming out of nowhere. There are a large number of ongoing legal battles between various states and a number of prediction market platforms regarding whether they should be offering sports markets in those jurisdictions. States where there are currently open cases on this matter include Nevada, Massachusetts, Michigan, Connecticut, and Illinois. Just last week, the Arizona attorney general’s office hit Kalshi with brand new charges.
Each state has their own regulations when it comes to sports betting, and many of the law enforcement officials in these states see prediction markets as avoiding that regulation. On top of that, CFTC Chair Mike Selig recently asserted his agency as the chief regulator of these markets in an effort to gain jurisdictional control over the matter. Notably, this move from Selig was heavily criticized by Utah Governor Spencer Cox and others.
Traditional sportsbooks such as DraftKings and FanDuel have also entered the prediction markets sector with dedicated platforms. However, these apps strategically offer sports event contracts primarily in states where traditional sports betting remains illegal under local laws by operating as CFTC-regulated derivatives, as this allows them to appease law enforcement officials in states where they’re already operating traditional sportsbooks.
Prediction market platforms have been making strong pushes into the sports niche, with the category accounting for 76.1% of recent trading volume on Kalshi, according to a report from DeFi Rate. Polymarket recently signed a deal with Major League Baseball to operate as the league’s official prediction market exchange, further illustrating this as a key growth area for the sector.
This is incredibly annoying. Getting several of these per day from Coinbase.
I don’t understand pushing this on users who trust coinbase to hold their stablecoin and crypto balances.
This is essentially encouraging me to gamble. What does that say about the internal philosophy… https://t.co/f43DQ8r4L2 pic.twitter.com/c66kvNHg5b
— John Palmer (@johnpalmer) March 22, 2026
Crypto exchanges have also pivoted to pushing prediction markets on their platforms, with Coinbase seemingly annoying users over the weekend with push notifications regarding updates on markets related to the ongoing NCAA basketball tournament. Crypto exchange Gemini is currently being sued by one investor due to the platform’s pivot into the prediction market sector allegedly being previously undisclosed as the company went public last year.
On top of the concerns regarding the enabling of degenerate gambling and whether the exchanges are even legal at the state level, there has also been insider trading cases related to the emergence of prediction markets, most notably prior to the beginning of U.S. military action in Venezuela and Iran.
That said, the exchanges are attempting to clamp down on this activity, with Kalshi taking action against two users for insider trading in late February. On Monday, Polymarket also announced new market integrity rules in an effort to push back further on these issues. Additionally, the Federal Reserve recently put out a report regarding the value Kalshi’s markets can provide as an additional tool for gauging the likelihood of various future developments in the economy and financial markets, showing these platforms do have value to provide to the world as well.
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