Key Highlights
- Bipartisan Senate legislation seeks to prohibit CFTC-regulated platforms such as Kalshi and Polymarket from listing sports betting contracts
- DraftKings (DKNG) and Flutter Entertainment (FLUT) each gained approximately 8% during premarket trading Monday
- The proposed legislation would extend to casino-style offerings including slots, video poker, and blackjack on prediction market platforms
- Sen. Adam Schiff and Sen. John Curtis are backing the bill — marking the first cross-party Senate initiative focused on prediction market regulation
- Multiple states such as Nevada, Arizona, Massachusetts, and Michigan have already pursued independent legal challenges against Kalshi
DraftKings (DKNG) soared approximately 8% during premarket hours Monday following a Wall Street Journal report revealing that a bipartisan coalition of U.S. senators plans to unveil legislation banning prediction market platforms from listing sports betting contracts.
Traditional sports betting operators welcomed the development, as they have faced ongoing competition from platforms like Kalshi and Polymarket for sports wagering market share.
The proposed legislation would prohibit entities under Commodity Futures Trading Commission (CFTC) regulation from offering contracts based on sporting events. This would have a direct effect on Kalshi and Polymarket’s domestic operations — two leading players in the prediction market space.
The bill would extend beyond sports betting to prohibit casino-style entertainment on these platforms, encompassing slot machines, video poker, blackjack, and bingo.
Sen. Adam Schiff (D., Calif.) stated the CFTC is “greenlighting these markets and even promoting their growth,” emphasizing that “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.”
Co-sponsor Sen. John Curtis (R., Utah) framed the concern through a local lens. “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,” he stated.
This represents the inaugural bipartisan Senate legislation addressing prediction market oversight — a significant development in the escalating tension between state regulators, federal agencies, and the platforms operating in this space.
Flutter Entertainment (FLUT), the parent company of FanDuel, also saw premarket gains of around 8% following the announcement, as the proposed law would eliminate a significant competitive challenge to its primary operations.
Ongoing State-Level Legal Actions
The legislative effort emerges while multiple states have already initiated action against Kalshi independently. Nevada obtained a temporary restraining order preventing Kalshi from listing contracts related to sports, elections, and entertainment.
Arizona escalated matters by bringing criminal charges against Kalshi’s parent entities for allegedly conducting an illegal gambling operation without proper licensing — though Kalshi has contested these allegations and requested the state withdraw the case.
Massachusetts and Michigan have both brought lawsuits against Kalshi, contending that its prediction markets constitute unlicensed sports betting. Polymarket has also initiated legal action against Michigan to block state gambling regulations from applying to its operations.
On the federal front, the CFTC has asserted it maintains exclusive authority over commodities derivatives, which include event contracts. In February, the agency filed a brief with the Ninth Circuit defending this jurisdictional position.
Major Sports Leagues’ Position
Most prominent U.S. sports leagues have generally embraced legalized sports betting. Their stance on prediction markets shows greater complexity — with apprehensions regarding competitive integrity and the risk of insider information misuse.
Despite these concerns, Major League Baseball recently entered into a licensing agreement with Polymarket, providing the platform access to league data while establishing collaborative monitoring of baseball-related wagers on the platform.
DraftKings had issued no public comment on the proposed legislation as of Monday morning.
