Prediction markets face mounting scrutiny from Congress
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Senators Adam Schiff (D-CA) and John Curtis (R-UT) have introduced the bipartisan Prediction Markets Are Gambling Act to ban platforms regulated by the CFTC from trading on sports or casino outcomes,labeling sports-prediction contracts as bets that may violate state and federal law. The push comes after Major League Baseball struck a deal with Polymarket to make it the league’s exclusive prediction market partner. A broader push from Democrats, led by Sen. Chris Murphy and Rep. Greg Casar, seeks to prohibit wagers on government actions and other events deemed ripe for rigging. In response to scrutiny, Kalshi and Polymarket have unveiled new internal rules and guardrails aimed at preventing insider trading and other abuses, and there has been heightened regulatory attention, including a CFTC-MLB agreement to regulate sports prediction markets.
Schiff and Curtis team up to ban sports betting from prediction markets
Members of Congress are increasingly targeting prediction markets such as Polymarket and Kalshi with proposed regulations to limit bets on real-world events that critics say are primed for insider trading and flout laws against sports betting.
Sens. Adam Schiff (D-CA) and John Curtis (R-UT) have introduced the first bipartisan prediction markets bill in the Senate, the Prediction Markets Are Gambling Act, to ban platforms and other entities regulated by the Commodity Futures Trading Commission from trading on sports or casino games.
“Sports prediction contracts are sports bets — just with a different name,” Schiff said. “And yet, these contracts have been offered in all fifty states in clear violation of state and federal law.”
The bill comes after Major League Baseball inked a deal with Polymarket last week, making the platform its exclusive prediction market partner.
It also comes as a group of Democratic lawmakers, led by Sen. Chris Murphy (D-CT) and Rep. Greg Casar (D-TX), have unveiled legislation to prohibit wagers on government actions, terrorism, war, assassination, and other events “ripe for rigging.”
The betting platforms, which have grown rapidly in recent years, appear to be feeling the heat from Washington and are taking proactive steps amid a potential crackdown. Kalshi and Polymarket, bitter business rivals, each released new internal rules on Monday to govern aspects of their businesses that have come under scrutiny.
CFTC AND MLB SIGN AGREEMENT TO REGULATE SPORTS PREDICTION MARKETS
Polymarket released “enhanced market integrity rules” to “clarify” three core areas of “prohibited insider trading conduct,” namely trading on stolen confidential information, illegal tips, or by those who can influence the outcome.
Kalshi unveiled “new guardrails” to better prevent sports participants and political candidates from trading on their leagues and campaigns, respectively.
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