WASHINGTON – A bipartisan group of senators is pushing to restrict a growing form of online betting that operates outside the traditional regulatory framework governing giants like FanDuel and DraftKings. The proposed legislation, introduced Monday by Senators Adam Schiff (D-CA) and John Curtis (R-UT), targets platforms like Kalshi and Polymarket, which allow users to trade contracts based on the outcomes of future events, including sporting events. The core of the debate centers on whether these platforms constitute illegal sports betting, and whether existing regulations are sufficient to protect consumers and maintain market integrity.
The bill aims to clarify that these “prediction contracts” are, sports betting, and therefore subject to the same legal constraints. This comes as the American sports betting landscape has dramatically expanded since a 2018 Supreme Court decision overturned a federal ban, allowing individual states to legalize the practice. According to the American Gaming Association, total sports betting handle grew from $4.9 billion in 2017 to $121.1 billion in 2023 , a surge fueled by increased accessibility and aggressive marketing by established players.
The Regulatory Gray Area
Kalshi and Polymarket operate differently than traditional sportsbooks. They are regulated by the Commodity Futures Trading Commission (CFTC), which oversees derivatives markets. This allows them to offer contracts on a wider range of events, and with different mechanics, than state-regulated sportsbooks. However, Schiff and Curtis argue that the practical difference is minimal. “Sports prediction contracts are sports betting, just by another name,” Schiff stated in a press release. “And yet these contracts are currently offered in every state in clear violation of state and federal law.”
During Super Bowl LVIII this year, Kalshi reportedly saw trading volume exceed $1 billion , a 2700% increase year-over-year, demonstrating the growing popularity of these platforms. Polymarket, while less transparent about its volume, likewise facilitates significant trading activity on a variety of events.
Concerns Over Addiction and Consumer Protection
Senator Curtis highlighted concerns about the potential for addiction, particularly among young people. “Too many young people in Utah are exposing themselves to addictive sports betting and casino-style gaming contracts that belong under state control, not federal regulators,” he said. These concerns are supported by recent research from the Qualcomm Institute and the University of California, San Diego School of Medicine, which found a 61% increase in online searches for gambling addiction help following the expansion of online sportsbooks.
The rise of online gambling, and the ease with which individuals can access these platforms, has prompted renewed scrutiny of responsible gambling measures and the effectiveness of existing regulations. The American Psychiatric Association recognizes gambling disorder as a behavioral addiction, and emphasizes the importance of early intervention and access to treatment.
Kalshi Responds, Nevada and Arizona Take Action
Kalshi, in a statement provided to TechCrunch, pushed back against the proposed legislation, arguing it would stifle competition and drive users to unregulated offshore markets. “this bill is motivated by casino interests that sense threatened by competition. They are more concerned about protecting their monopolies than protecting consumers,” said Elisabeth Diana, a spokesperson for Kalshi.
Polymarket did not respond to requests for comment.
The legal challenges facing Kalshi extend beyond this proposed federal bill. The platform is currently temporarily banned in Nevada and is facing criminal charges in Arizona , adding to the regulatory pressure on the company.
What’s Next?
The bill now heads to committee for consideration. Its fate will likely depend on the level of bipartisan support it can garner, and the lobbying efforts of both the traditional sports betting industry and the prediction market platforms. The CFTC will also likely weigh in, as the legislation directly impacts its regulatory authority. The debate over how to regulate these emerging forms of online betting is likely to continue, as lawmakers grapple with balancing innovation, consumer protection, and the potential for addiction. The next key step will be a hearing in the Senate Banking Committee, currently scheduled for April 15, 2026.
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