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(AsiaGameHub) –   Senators Adam Schiff (D-Calif.) and John Curtis (R-Utah) are preparing to introduce a bill directed at platforms like Kalshi and Polymarket, which currently operate under the oversight of the Commodity Futures Trading Commission (CFTC). This initiative represents the inaugural bipartisan push in the Senate specifically aimed at the prediction market industry.

Senators Propose Bill Targeting Prediction Markets

The proposed legislation would prevent entities regulated by the CFTC from providing event contracts—binary wagers on future outcomes—related to sports. Furthermore, it would outlaw casino-style games, including blackjack, video poker, slot machines, and bingo.

Although this is the first bipartisan Senate move to regulate these markets, other lawmakers have previously sought to address these companies. For instance, Senator Chris Murphy and Congressman Greg Casar introduced a bill last week focused on preventing insider trading. Nevertheless, the current proposal stands as the first bipartisan attempt to overhaul the regulatory framework for prediction markets.

Proponents of the bill argue that these platforms function as a “backdoor” for gambling. Senator Schiff has rebuked the CFTC for authorizing these markets, while Senator John Curtis expressed apprehension regarding the exposure of youth to addictive betting practices, particularly in states like Utah where most gambling is illegal.

The bill aims to set federal standards while bolstering the authority of states to regulate gambling. It prohibits contracts involving sensitive topics such as military actions, death, and war due to security risks. A primary goal of the legislation is to prevent these platforms from using federal derivatives classifications to bypass state tax laws and gambling regulations, directly contesting current views on federal preemption.

Why Are Senators Proposing This Legislation?

Platforms like Polymarket and Kalshi allow users to trade contracts on diverse topics, such as pop culture, weather, politics, and sports. Because a large portion of their volume involves sports, they compete directly with established sportsbooks like DraftKings and FanDuel.

This competition has sparked controversy, as traditional sports betting has been subject to state-level regulation and taxation since the 2018 Supreme Court ruling in Murphy v. NCAA. Critics argue that these prediction markets circumvent state consumer protections, threaten tribal sovereignty, and fail to generate public revenue, unlike conventional gambling operations.

Conversely, prediction markets maintain that they provide financial derivatives, allowing them to function nationwide, including in jurisdictions like California and Utah that limit sports betting. The CFTC, under its current leadership, has taken a more lenient stance toward event contracts, which has encouraged industry expansion but drawn fire from legislators.

Meanwhile, states such as New York, Nevada, California, and Utah are taking legal steps against these platforms, with judicial opinions on their classification remaining inconsistent. Notably, Nevada recently forced Kalshi to cease operations within the state for a minimum of two weeks following a court order.

In summary, this legislation highlights a growing bipartisan consensus that prediction markets are essentially functioning as unregulated federal sportsbooks and casinos, thereby evading state-level oversight.