Far-reaching bipartisan bill seeks to restrict prediction markets

• A new bill called the Prediction Markets Are Gambling Act seeks to further restrict these platforms
• The bill aims to take out the sports event contracts that have given a boost to the sector, but also became the main contentious point for lawmakers
• Multiple draft laws and legal actions have been taken around the country against prediction markets

Legislative scrutiny of the prediction market sector is intensifying, with multiple bills and policy proposals circulating in the public sphere. Now, a bipartisan effort led by Senator Adam Schiff, D-Calif., and John Curtis, R-Utah, seeks to further restrict these platforms’ ability to offer products that may conflict with local state legislation.

Prediction markets face more pushback from newly proposed legislation

The unflatteringly named " Prediction Markets Are Gambling Act" sets its goal from the start - to focus on the event contracts that have propelled companies such as Kalshi and Polymarket to commercial success, but have also embroiled them in a string of lawsuits across the United States.

The bipartisan bill seeks to put an end to what it describes as "sports bets" conducted on the aforementioned and other sector platforms, although both Kalshi and Polymarket have insisted that there is no actual betting going on their platforms.

Sen. Schiff begs to differ, adding: "Sports prediction contracts are sports bets, just with a different name. These contracts are currently offered in all fifty states in clear violation of state and federal law. It’s time for Congress to step in and eliminate this backdoor, which violates state consumer protections, intrudes upon tribal sovereignty, and offers no public revenue."

This criticism was reflected by Sen. Curtis, who also said that the goal of the bill was to ensure that state authority is respected, dismissing the argument that sports event contracts lie within the Commodity Futures Trading Commission’s remit.

"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," Sen. Curtis said.

The new bill comes on top of a similar proposal filed by Sen. Richard Blumenthal, who has similarly criticized what he sees as a lack of sufficient federal safeguards on the prediction market sector.

Litany of legal action directed against the prediction market sector

Sen. Blumenthal appears more willing to accept the existence of prediction markets, however, while the newly-filed draft law by Sen. Curtis and Sen. Schiff has been looking for more drastic action.

Apart from these three senators’ filings, Senator Chris Murphy, Congressman Greg Casar, and Congresswoman Yassamin Ansari introduced the BETS OFF ACT last week.

Prediction markets are facing more challenges, as a federal court in Nevada also issued a temporary restraining order against Kalshi, suspending the platform’s markets on sports, politics, and entertainment.

All of these developments have presented the sector with fresh challenges amid unprecedented legislative and regulatory pushback. Kalshi has been litigating with nearly all states that have attempted to restrict its operations and has maintained that, despite what draft bills say, prediction markets are not gambling.

Image credit: Unsplash.com