Key Highlights
- Bipartisan Senate legislation seeks to prohibit CFTC-regulated platforms such as Kalshi and Polymarket from hosting sports betting contracts
- Shares of DraftKings (DKNG) and Flutter Entertainment (FLUT) each climbed approximately 8% in premarket trading Monday
- The proposed legislation would additionally prohibit casino-style gaming including slots, video poker, and blackjack on prediction market platforms
- Senators Adam Schiff and John Curtis are jointly sponsoring this legislation — representing the first bipartisan Senate initiative to regulate prediction markets
- Multiple states such as Nevada, Arizona, Massachusetts, and Michigan have already pursued independent legal measures against Kalshi
Shares of DraftKings (DKNG) climbed approximately 8% during premarket hours Monday following a Wall Street Journal report revealing that a bipartisan coalition of senators plans to unveil legislation banning prediction market platforms from hosting sports betting contracts.
Traditional sports betting companies welcomed the development, as they’ve been locked in competition with platforms such as Kalshi and Polymarket over the same customer base and wagering revenue.
The proposed legislation would prohibit organizations under Commodity Futures Trading Commission (CFTC) oversight from offering contracts related to sports competitions. This restriction would significantly affect Kalshi and Polymarket’s domestic operations — both leading players in the prediction market space.
Additionally, the bill seeks to eliminate casino-style gaming options from these platforms, specifically targeting slot machines, video poker, blackjack, and bingo.
Senator Adam Schiff (D., Calif.) criticized the CFTC for “greenlighting these markets and even promoting their growth,” stating 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.”
Joint sponsor Senator John Curtis (R., Utah) expressed personal concerns about the issue. “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 explained.
This legislation represents the initial bipartisan Senate measure addressing prediction market oversight — a significant development in the escalating dispute among state authorities, federal agencies, and the platforms operating in this space.
Flutter Entertainment (FLUT), the parent company behind FanDuel, experienced similar gains of roughly 8% in premarket trading, as the legislation would eliminate a significant competitive challenge to its primary operations.
Ongoing State-Level Legal Challenges
The congressional initiative emerges while multiple states have independently taken action against Kalshi. Nevada obtained a temporary restraining order preventing Kalshi from providing contracts related to sports, elections, and entertainment events.
Arizona escalated matters by filing criminal charges against Kalshi’s parent entities for purportedly running an illegal gambling operation without proper licensing — though Kalshi has contested these allegations and called for the state to dismiss the charges.
Both Massachusetts and Michigan have initiated lawsuits against Kalshi, claiming its prediction markets constitute unlicensed sports betting operations. Polymarket has countered by suing Michigan to block enforcement of state gambling regulations against its platform.
On the federal front, the CFTC has asserted it possesses sole authority over commodities derivatives, encompassing event contracts. The agency submitted a brief to the Ninth Circuit in February reinforcing this jurisdictional claim.
Sports Leagues’ Position on Prediction Markets
Most prominent American sports leagues have generally endorsed legalized sports betting. However, their stance on prediction markets remains more nuanced — driven by apprehensions regarding competitive integrity and potential misuse of insider knowledge.
Despite these concerns, Major League Baseball recently established a licensing agreement with Polymarket, granting the platform access to official league data while collaborating on monitoring baseball-related wagers.
As of Monday morning, DraftKings had not issued any official response regarding the proposed legislation.
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