Key Highlights
- Bipartisan Senate legislation seeks to prohibit CFTC-overseen platforms such as Kalshi and Polymarket from facilitating sports betting contracts
- Shares of DraftKings (DKNG) and Flutter Entertainment (FLUT) each climbed approximately 8% during premarket hours on Monday
- The proposed legislation would additionally prohibit casino games including slots, video poker, and blackjack on prediction market platforms
- Senators Adam Schiff and John Curtis are backing the measure — marking the first bipartisan Senate initiative to oversee prediction markets
- Multiple states such as Nevada, Arizona, Massachusetts, and Michigan have already pursued independent legal challenges against Kalshi
Shares of DraftKings (DKNG) surged approximately 8% during Monday’s premarket session following a Wall Street Journal report revealing that bipartisan U.S. senators plan to unveil legislation prohibiting prediction market platforms from facilitating sports betting contracts.
The development proved favorable for established sports betting companies, which have faced ongoing competition from platforms such as Kalshi and Polymarket in the battle for sports gambling revenue.
The proposed legislation seeks to bar Commodity Futures Trading Commission (CFTC)-regulated entities from listing contracts related to athletic competitions. This would significantly affect Kalshi and Polymarket’s domestic operations — both prominent players in the prediction market space.
The bill would further prohibit these platforms from hosting casino-style gaming options, including slot machines, video poker, blackjack, and bingo.
Senator Adam Schiff (D., Calif.) criticized the CFTC for “greenlighting these markets and even promoting their growth,” asserting 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 Senator John Curtis (R., Utah) framed the matter as a local concern. “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 represents the inaugural bipartisan Senate legislation focused on prediction market oversight — a significant development in the escalating conflict among state authorities, federal agencies, and the platforms operating in this space.
Flutter Entertainment (FLUT), the parent company behind FanDuel, similarly rose approximately 8% in premarket trading following the announcement, as the legislation would eliminate a major competitive challenge to its primary operations.
Ongoing Legal Challenges
The congressional initiative arrives as 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 events.
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 called on the state to withdraw the charges.
Both Massachusetts and Michigan have filed lawsuits against Kalshi, contending that its prediction markets constitute unlicensed sports betting. Polymarket has responded by suing Michigan to block enforcement of state gambling regulations against its platform.
At the federal level, the CFTC has consistently asserted it possesses exclusive authority over commodities derivatives, including event-based contracts. In February, the agency filed a brief with the Ninth Circuit defending this jurisdictional stance.
Sports Leagues’ Position on the Issue
Major American sports leagues have generally embraced legalized sports betting. However, their stance on prediction markets remains more nuanced — with apprehensions regarding competitive integrity and the possibility of insider trading.
Despite these concerns, Major League Baseball recently entered into a licensing agreement with Polymarket, providing platform access to official league data while establishing collaborative monitoring of baseball-related wagers.
As of Monday morning, DraftKings had not issued any public commentary regarding the proposed legislation.
