A bipartisan pair of U.S. senators introduced legislation this week that would bar prediction market platforms like Kalshi and Polymarket’s U.S. operations from offering contracts tied to sporting events, the latest in a wave of federal and state efforts to rein in an industry that has grown explosively since Polymarket’s rise during the 2024 election cycle. Senators Adam Schiff (D-CA) and John Curtis (R-UT) are leading the push, which would also prohibit casino-style products — slot machines, video poker, blackjack — from appearing on platforms regulated by the Commodity Futures Trading Commission.
Curtis framed the bill in generational terms. “Too many young people in Utah are getting exposed to addictive sports betting and casino-style gaming contracts,” he said. Schiff argued the platforms have effectively built a “backdoor” into gambling, routing around the state-level consumer protections that govern traditional sportsbooks like DraftKings and FanDuel. DraftKings and Flutter, the parent of FanDuel, saw their shares jump roughly 7% on news of the bill — a sign that Wall Street reads the legislation as a competitive win for licensed sportsbooks if it passes.
The bill lands as Kalshi fights its most serious legal setback yet. On March 20, Nevada District Court Judge Jason D. Woodbury signed a 14-day temporary restraining order blocking the company from offering sports, election, and entertainment event contracts in the state — the first time a U.S. court has barred Kalshi from operating. Arizona’s attorney general charged the company the same week with running an unlicensed gambling business. Officials in 11 states have now sent cease-and-desist orders to prediction market operators, and litigation is active in at least eight states.
The core legal dispute turns on a jurisdictional question that neither side has resolved. Kalshi holds a license from the CFTC, which classifies its products as futures contracts and argues it has federal preemptive authority over the platforms. State gaming regulators disagree, insisting that a contract paying out based on which team wins a basketball game is a sports bet, full stop, regardless of what federal agency approved it. CFTC Chairman Mike Selig has filed court briefs backing the platforms, complicating the picture for states trying to enforce their own laws.
Congress has not waited for the courts to settle it. Alongside the Schiff-Curtis sports betting bill, Senator Chris Murphy (D-CT) and Representative Greg Casar (D-TX) introduced the BETS OFF Act — Banning Event Trading on Sensitive Operations and Federal Functions — which would prohibit CFTC-regulated platforms from listing contracts on government actions, war, terrorism, assassination, and events where a trader knows or controls the outcome in advance. The bill was prompted in part by suspicious trading activity observed hours before U.S. military strikes on Iran and the operation to extract Venezuelan President Nicolás Maduro, in which several prediction market users placed large bets and cashed out for hundreds of thousands of dollars.
The CFTC itself withdrew a proposed rule that would have banned sports-related contracts on prediction markets in late January, saying new rules were forthcoming. That retreat cleared the regulatory space that lawmakers are now trying to fill through statute. Whether the Schiff-Curtis bill or the BETS OFF Act can move through a divided Congress is uncertain, but the coordination between Democrats and at least one prominent Republican signals the issue has moved beyond partisan lines.
Kalshi has not commented publicly on the Nevada restraining order. The company is expected to contest it before the two-week window expires.