Bipartisan Senate bill aims to prohibit sports betting on prediction markets

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2026/01/23: Iowa bill aims to bring prediction markets under state regulation 2026/01/05: Bill aims to prevent government officials from using prediction market platforms 2026/02/12: Nevada Rep. Titus’s bill aims to stop prediction markets from offering sports event contracts in the U.S. 2026/03/13: CFTC issues guidance to prediction markets on sports event contracts

The Backstory

Why sports markets on prediction platforms are under new scrutiny

Prediction platforms that trade on real-world outcomes have surged from niche finance into the sports mainstream, drawing large volumes around tentpole events and raising alarms from regulators and lawmakers. That momentum is now colliding with a tightening policy push. Even before the latest Senate move, House and Senate lawmakers were laying down markers to curb or reshape the industry, arguing that event contracts that look and feel like wagers are slipping past long-standing gambling safeguards. The backdrop includes surging activity around marquee contests and a patchwork of state enforcement, leaving operators to straddle commodities rules at the federal level and gambling rules in the states.

In the House, Nevada Rep. Dina Titus proposed the Fair Markets and Sports Integrity Act to bar platforms from listing contracts tied to pro or amateur sports, a move she framed as preserving consumer protections and state and tribal revenues. She amplified that message in a post on X, arguing consumers need transparency and accountability; her statement is archived on her account here. Separately, senators have advanced broader “guardrails” proposals aimed at fraud and manipulation, reflecting a bipartisan appetite to police the industry rather than allow sports-style markets to proliferate by default.

The latest push in the Senate would more explicitly close off sports and casino-style event contracts listed under derivatives rules. The text of that effort, the Prediction Markets Are Gambling Act, is available as a discussion draft from Sen. Adam Schiff’s office here, signaling a bid to draw a brighter line between federally supervised prediction venues and state-regulated sportsbooks.

States test their reach, and courts begin to weigh in

While federal lawmakers debate definitions and duties, states are asserting jurisdiction through enforcement and new legislation. In Ohio, a judge recently rejected a bid by Kalshi to avoid state oversight, a decision noted in coverage of the CFTC’s advisory that underscored how state gambling laws can reach prediction markets offering sports contracts. That ruling adds legal weight to a view many state regulators have pushed for months: when platforms sell outcomes that mirror sportsbook bets, they fall under gambling statutes regardless of a federal commodities registration.

Iowa has moved toward an explicit permitting regime. Lawmakers introduced Senate File 2085 to bring federally regulated platforms under state oversight, including an initial US$10 million license and annual renewals. The proposal would sweep in markets on sports, politics and current affairs and require a state permit before offering contracts to residents. The bill’s text and history are posted on the legislature’s site here. Supporters argue Iowa needs a framework to capture activity and revenue now flowing to unlicensed products; critics warn of addiction risks and note the draft lacks detailed consumer protections like age verification or self-exclusion.

These state moves form a two-track pressure system: courts clarifying that sports contracts are fair game for state gambling laws and legislatures crafting regimes to license, tax or block them. For operators, the friction raises real distribution risk. A platform allowed to list a “futures-style” contract nationally could still find the product geo-blocked or sanctioned in key states where regulators see it as a bet.

Competing federal fixes take shape

Policy responses in Washington are diverging between outright prohibitions on sports contracts and more comprehensive compliance regimes. Titus’s measure would amend commodities law to draw sports out of bounds altogether for prediction venues. Her legislative activity is trackable on Congress.gov, reflecting an effort that also resonates with casino and sportsbook incumbents wary of federally supervised competitors. The legislation followed a Super Bowl in which prediction platforms touted more than US$1 billion in trading volume while Nevada books reported softer results, a contrast noted in our reporting on Titus’s bill.

Another Senate track aims to impose standards rather than categorical bans. Sen. Richard Blumenthal introduced the Prediction Markets Security and Integrity Act to combat insider trading, bar conflicted participants and restrict the use of artificial intelligence for targeted promotions. The proposal responds to concerns that prediction venues can become channels for nonpublic information or war-related speculation, and that design choices can intensify risk for vulnerable users. If enacted, such guardrails would push the industry toward surveillance and compliance models closer to brokerages than casinos, while leaving open questions about preemption versus state authority on sports.

Integrity risks move from hypothetical to headline

Supporters of stricter rules have been helped by recent controversies that tested the industry’s defenses. A high-profile trading account on Polymarket drew attention after profiting on Venezuela-related contracts, prompting questions about access to nonpublic information. In response, lawmakers moved to wall off potential conflicts and leaks originating inside government. Rep. Ritchie Torres drafted the Public Integrity in Financial Prediction Markets Act of 2026 to bar federal elected officials, appointees and executive branch employees from using the platforms. The proposal complements broader insider-trading prohibitions by cutting off a channel where real-time bets can reflect privileged signals, and it targets the appearance of impropriety that could undermine confidence in markets tied to public policy.

Industry players have pushed back, saying their rules already prohibit trading on nonpublic information and that prediction markets provide forecasting value the public and policymakers can use. But as volumes swell around geopolitics and sports, scrutiny of conflicts has sharpened, especially given advisory ties between political figures and platform operators. That political overlay raises the stakes for congressional action, since perceived self-dealing could become a liability for the sector if left unaddressed.

What the CFTC has — and hasn’t — settled

The Commodity Futures Trading Commission has tried to thread the needle between encouraging innovation and protecting markets. In new guidance to exchanges, it warned about manipulation risks in sports-related contracts, especially markets pegged to a single player’s performance, and launched a public consultation on insider controls and investor safeguards. Our coverage of the advisory notes the agency’s message: growth is welcome, but operators must meet obligations under the Commodity Exchange Act and Commission rules.

What the CFTC has not provided is a categorical federal blessing for sports contracts that look like sportsbook props. Instead, it has signaled caution while courts and states assert authority. That gap helps explain why members of Congress are moving to write bright-line rules. One path would carve sports out of federally supervised prediction markets altogether. The other would impose integrity standards, data-use limits and conflict prohibitions that could make such listings more defensible but still subject to state gambling laws. Either way, the center of gravity is shifting from permissive ambiguity to defined compliance or prohibition.

The stakes are material for platforms and for traditional gaming. If Congress codifies a sports ban under commodities law — as outlined in Schiff’s discussion draft available here — sportsbooks would retain exclusive control over sports wagering under state regimes. If lawmakers opt for guardrails without a ban, operators would face heavy compliance costs and uncertain state-by-state exposure. For consumers, the outcome will determine whether sports prediction markets remain accessible as financial products, migrate into licensed sportsbooks or disappear from the regulated landscape.