A bipartisan group of senators has moved to narrow the scope of federally regulated prediction markets in the United States. Senators Adam Schiff and John Curtis introduced the “Prediction Markets Are Gambling Act”, with the stated aim of blocking CFTC-regulated platforms from listing contracts tied to sports and casino-style games.
The proposal puts direct pressure on exchanges such as Kalshi and Polymarket and marks a new phase in the fight over whether these products belong inside derivatives markets or under state gambling rules. The bill would remove a visible and fast-growing category of event-linked contracts from regulated exchanges if it advances in its current form.
A Direct Challenge to Sports and Casino Contracts
The legislation takes a narrow but forceful approach to product eligibility. It would prohibit any agreement, contract or transaction related to a sporting event or athletic competition on CFTC-regulated prediction platforms, while also explicitly banning casino-style games. The examples cited in the measure include slot machines, video poker, blackjack and bingo.
Its sponsors are presenting the bill as a jurisdictional correction rather than a technical market tweak. The underlying argument is that these contracts should fall under state gambling authority, not under a federal derivatives framework that critics believe has allowed prediction exchanges to expand too far. That framing is likely to become central as the bill moves through the Senate process.
Schiff and Curtis have both tied the proposal to consumer and state-control concerns. Their public comments make clear that they see the current structure as a federal opening for products they believe should remain restricted or supervised at the state level. In practical terms, that puts additional pressure on the CFTC’s recent stance toward event-based markets.
The proposal also lands after a series of state-level enforcement actions that had already raised the temperature around this sector. Nevada has already secured a temporary restraining order against certain Kalshi contracts, and Arizona has filed charges alleging illegal gambling activity, showing that the legal pressure was building even before the Senate bill arrived.
Markets Quickly Repriced the Competitive Landscape
Investors appeared to read the bill as a potential advantage for traditional sportsbooks. On March 23, 2026, shares of DraftKings and Flutter Entertainment rose about 6.3% and 6.4%, respectively, as markets priced in the possibility of reduced competition from prediction exchanges. That reaction suggests the proposal is already being treated as more than a symbolic political gesture.
Any business with exposure to event-driven products now faces a higher level of legal, operational and compliance risk, especially if liquidity routing or token-linked strategies touch prediction-market activity. That risk is amplified by the fact that state and federal scrutiny are now moving in parallel.
The near-term takeaway is straightforward. Firms tied to prediction products should review product exposure, tighten compliance oversight and follow the Senate process closely, because the bill has the potential to materially narrow a live part of the market.