The Prediction Markets Are Gambling Act: What It Says, What It Threatens, and What Happens Next
Senators Schiff and Curtis introduced the Prediction Markets Are Gambling Act on March 23, 2026. Here's what it actually does, how Kalshi and Polymarket responded, and what every trader needs to know.
Published: March 24, 2026 | Category: Regulation | Read time: 9 min
Introduction
It's been a chaotic week for prediction markets. On Monday, March 23, two U.S. senators — one Democrat, one Republican — dropped a bill with a very blunt name: the Prediction Markets Are Gambling Act. If it passes, it would strip Kalshi, Polymarket, and every other CFTC-regulated prediction market of its ability to list sports contracts — permanently.
The same day the bill landed, both Kalshi and Polymarket rushed out emergency insider-trading guardrails. That's not a coincidence. It's the prediction market industry scrambling to show Congress they can self-regulate before Congress does it for them.
Here's the full breakdown: what the bill actually says, why it has bipartisan support, how the platforms responded, and what it means for anyone currently trading on sports markets.
What the Bill Actually Does
The Prediction Markets Are Gambling Act was introduced on March 23, 2026 by Sen. Adam Schiff (D-CA) and Sen. John Curtis (R-UT). It is a short, targeted amendment to the Commodity Exchange Act (CEA) — not a sweeping financial reform bill.
The core prohibition: No CFTC-registered entity may list, clear, or offer for trading any contract that relates to a "sporting event or athletic competition" or a "casino-style game."
The bill's definition of "sporting event or athletic competition" is deliberately broad: any live or virtual contest involving physical activity or skill — amateur, collegiate, or professional. Casino-style games are defined as slot machines, video poker, blackjack, roulette, craps, bingo, lottery, or simulations thereof.
In plain terms: if this bill passes, Kalshi and Polymarket could no longer offer March Madness markets, Super Bowl contracts, NBA Finals trading, UFC fight outcomes, or any other sports-tied prediction contract. Those markets — which generated over $1 billion in Super Bowl trading volume alone in 2026, according to the bill's sponsors — would be gone from CFTC-regulated platforms overnight.
The bill does not ban prediction markets entirely. Political markets, economic indicators, weather contracts, and other non-sporting events would remain unaffected. The bill specifically targets the sports overlap — the space where prediction market critics say the line between "financial instrument" and "gambling" vanishes.
The bill's full text is available at schiff.senate.gov.
Why This Bill Has Bipartisan Support — And Why That's Dangerous
Most regulatory threats to prediction markets have come from one side of the aisle. This one is different.
Sen. Schiff is a California Democrat whose state has no legal sports betting framework for prediction markets. His argument is jurisdictional: "Sports prediction contracts are sports bets — just with a different name. And yet, these contracts have been offered in all 50 states in clear violation of state and federal law." (The Hill)
Sen. Curtis is a Utah Republican — and Utah bans all gambling, full stop. His framing is more about family values and state sovereignty: "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." (Curtis official press release via UtahPolicy.com)
Two parties, two very different motivations — but they land in the same legislative place. That's what makes this bill structurally more threatening than the BETS OFF Act introduced earlier this month (which targets government-action and sensitive-events contracts), or Rep. Dina Titus's House companion bill (the Fair Markets and Sports Integrity Act).
When both parties see political gain in restricting an industry, the industry is in trouble. DraftKings and FanDuel parent Flutter Entertainment's stock spiked the day the bill was announced — the sportsbook industry views it as eliminating a key competitor. (AP via Las Vegas Sun)
The industry does have defenders. The Coalition for Prediction Markets — which counts former House Financial Services Committee Chair Patrick McHenry (R-NC) as a senior adviser — pushed back immediately: "Millions of Americans trade sports on federally regulated prediction markets. Banning sports would just bolster unregulated platforms that lack uniform protections. The casino monopoly behind this bill does not care about consumer safety. They want to eliminate competition." (The Hill)
Kalshi's own spokesperson, Elisabeth Diana, echoed this: "Banning sports on regulated prediction markets would just push this behavior offshore, where no regulation exists." (ESPN, March 23, 2026)
Why This Bill Is Being Introduced Now: The Insider Trading Catalyst
The timing of this bill is not random. It follows two high-profile insider-trading controversies that gave critics of prediction markets exactly the ammunition they needed.
Earlier in 2026, Polymarket users placed suspiciously well-timed bets on U.S.-Israeli air strikes on Iran and the military extraction of Venezuelan President Nicolás Maduro — in both cases, shortly before those events became public knowledge. According to AP reporting, users appeared to have profited from advance knowledge of Trump administration military decisions. (AP via ABC News)
Sen. Schiff said flat out: "I'm confident that people in the White House or those close to officials who knew about military plans cashed in."
This was the catalyst that transformed abstract concerns about prediction markets into a legislative emergency. The BETS OFF Act (introduced by Sen. Murphy and Rep. Casar earlier this month) targets the government-action angle. The Prediction Markets Are Gambling Act targets the sports angle. Together, they represent a two-front legislative squeeze.
There's also a political conflict-of-interest dimension. As AP reporting noted, CFTC Chair Michael Selig — who has publicly backed prediction markets and vowed to fight state-level bans — is operating in an environment where President Trump's son Donald Trump Jr. has invested in Polymarket through a venture capital firm and serves as a strategic adviser for Kalshi. (AP via US News) Critics argue the CFTC's pro-prediction-market stance is not independent regulation — it's politically compromised.
How Kalshi and Polymarket Responded
Both platforms moved within hours of the bill's announcement. Whether you view it as genuine reform or damage control depends on your priors.
Kalshi's new guardrails (announced March 23, 2026, via their official blog):
- Political candidates are now preemptively blocked from trading on their own campaigns. (Previously, elected officials were blocked; now it extends to candidates before taking office.)
- Sports insiders — athletes, team personnel, referees — are preemptively blocked from trading on markets in their sport. Kalshi has been building screening lists in partnership with integrity compliance firm IC360. Previously, such trades required post-trade investigation; now they're blocked at entry.
- Whistleblower functionality added directly to market pages, allowing users to flag suspicious trading patterns in real time.
Kalshi cited a recent enforcement case as the catalyst: former California gubernatorial candidate Kyle Langford, who bet approximately $200 on his own candidacy and posted about it publicly. He received a five-year ban and a total financial penalty of $2,246.36 (disgorgement of $246.36 plus a $2,000 penalty). (CryptoTimes)
Polymarket's response was broader in scope:
- Rewrote terms of service to explicitly prohibit trading by anyone with confidential information, anyone who can influence the outcome of an event, or anyone acting on illegal tips — covering athletes, policymakers, company officials, and any outcome-influencer.
- Launched "Market Integrity" pages with user-facing reporting tools.
- Polymarket CLO Neal Kumar: "These rule enhancements make our expectations abundantly clear for every participant across both platforms." (AP via Las Vegas Sun)
The cynical read: both platforms were doing the minimum required to argue against the bill. The charitable read: they had the infrastructure building for months and the bill's announcement forced them to ship what was already ready. Kalshi's head of enforcement Robert DeNault told Axios: "You'll never stop all illicit activity everywhere. That's just an impossible standard. But you shouldn't make the perfect the enemy of the good either." (CryptoTimes)
The Regulatory Landscape: Where This Fits
The Prediction Markets Are Gambling Act doesn't exist in isolation. It's part of a rapidly expanding regulatory stack targeting prediction markets from multiple directions simultaneously.
Federal legislative pressure:
- Prediction Markets Are Gambling Act (Mar 23, 2026) — Schiff/Curtis — bans sports and casino contracts
- BETS OFF Act (Mar 17, 2026) — Murphy/Casar — bans terrorism, assassination, war, government-action, and events where outcome is known in advance
- Fair Markets and Sports Integrity Act — House, Rep. Dina Titus (D-NV) — similar companion bill
CFTC rulemaking: The CFTC under Chair Michael Selig has moved to relax the gaming-contract prohibition that existed for 15 years under the Commodity Exchange Act — which is precisely what the Prediction Markets Are Gambling Act seeks to reverse. (Utah Policy) The CFTC has also entered a formal partnership with Major League Baseball.
State-level battles: Nevada, Arizona, Utah, Michigan, and Massachusetts have all taken action. Arizona Attorney General Kris Mayes filed criminal charges against Kalshi (20 counts, misdemeanors) on March 17 — the first criminal charges in the industry's history. Utah Governor Spencer Cox signed legislation expanding the state definition of gambling to include prediction market prop bets.
Industry response coalition: "Gambling Is Not Investing" launched earlier this month with former Rep. Mick Mulvaney (R-SC) leading the effort against prediction markets, while the Coalition for Prediction Markets defends them. Two organized lobbying camps now exist. (The Hill)
What's at Stake Commercially
Sports contracts are not a side feature for Kalshi and Polymarket — they're a core growth driver.
The March Madness winner market alone had over $100 million in trading volume as of the bill's introduction. Super Bowl trading volume surpassed $1 billion across prediction market platforms in 2026. Both Kalshi and Polymarket have signed business deals with sports teams and leagues specifically to legitimize and grow their sports market presence. (Utah Policy)
Combined trading volumes across prediction market platforms reached $18.3 billion in February 2026 alone. (ESPN, March 23, 2026) Sports contracts represent a significant portion of that volume.
If the bill passes, that revenue disappears from regulated platforms. The question is whether it simply moves offshore — to unregulated international venues — or whether users transition to other contract categories.
What This Means for Your Positions Right Now
If you currently have open sports positions on Kalshi or Polymarket, here's the practical reality:
In the short term (weeks to months): Nothing changes. The bill was introduced on March 23 and referred to committee. It has not passed. It has not been scheduled for a vote. Sports markets remain fully operational on both platforms.
Passage probability: Senate bills without a clear procedural path through committee often die quietly. However, bipartisan sponsorship significantly increases the bill's staying power. The industry's CFTC backing creates a structural standoff: even if the bill passes the Senate, the CFTC under Selig would likely challenge or delay implementation. Courts could become the final arbiter.
What to watch: If the bill gets a committee hearing date in the Senate Agriculture Committee (which oversees CFTC jurisdiction), that signals it's moving. If it sits in committee without a hearing, it's stalled.
If the bill eventually passes: Contracts you hold would be settled per their existing rules — the bill specifies it applies to contracts entered into after the date of enactment, not retroactively. Your existing positions would be honored.
You can track current prediction market odds and volume at predictionmarkets.us.
FAQ
Does the Prediction Markets Are Gambling Act ban all prediction markets?
No. It only bans contracts tied to sporting events, athletic competitions, and casino-style games from CFTC-regulated platforms. Political markets, economic indicators, weather, and most other categories would be unaffected.
Is Kalshi still legal to use right now?
Yes. The bill has been introduced but not passed. Kalshi is fully operational and CFTC-regulated. Nothing changes for traders until and unless the bill becomes law.
Why do senators call prediction markets "gambling" when the CFTC calls them legal?
This is the core jurisdictional dispute. The CFTC under its current leadership classifies prediction market contracts as commodity futures — not gambling. The senators argue Congress never intended the Commodity Exchange Act to permit sports betting, and that the CFTC has overstepped. Both sides are legally coherent; that's why it's a genuine debate rather than a settled matter.
What's the difference between this and the BETS OFF Act?
They target different contract categories. The BETS OFF Act (introduced March 17, 2026 by Sen. Murphy and Rep. Casar) would ban contracts on terrorism, assassination, war, non-financial government actions, and events where someone knows or controls the outcome in advance. The Prediction Markets Are Gambling Act targets sports and casino contracts. Together, they represent a comprehensive attempt to strip prediction markets of their fastest-growing market categories.
What happens to sports contracts if the bill passes?
The bill would take effect for contracts entered into after the enactment date. Existing open positions would be settled under their original terms. New sports contracts could no longer be listed on CFTC-regulated platforms.
Conclusion
The Prediction Markets Are Gambling Act is not the first attempt to restrict prediction markets, but it may be the most structurally threatening. Its bipartisan sponsorship reflects two different political calculations converging on the same outcome — and that's when bills tend to survive committee.
What makes the current moment genuinely different from prior regulatory threats is the simultaneous pressure: federal bills, state criminal charges, CFTC rulemaking, lobbying coalitions, and insider-trading scandals all hitting at once. The industry's responses — emergency guardrails, whistleblower tools, updated terms — are the right moves, but they may be too late for the Congress that's watching.
Whether you're a sports trader on Kalshi, a Polymarket user with March Madness positions, or just someone watching a fast-moving regulatory story, the next few months will determine whether prediction market sports contracts are a permanent feature of the financial landscape or a brief window that's about to close.
Track what's happening across all prediction market platforms — prices, volumes, and regulatory news — at predictionmarkets.us.
Sources & Verification
- Bill introduction date (March 23, 2026): The Hill — verified March 24, 2026
- Full bill text: schiff.senate.gov — verified March 24, 2026
- Sen. Schiff quote ("sports prediction contracts are sports bets"): The Hill — verified March 24, 2026
- Sen. Curtis quote ("Too many young people in Utah"): Utah Policy press release — verified March 24, 2026
- Super Bowl $1B+ trading volume claim: Utah Policy press release (quoting senators' background); CoinGenius — verified March 24, 2026
- March Madness $100M+ volume: Utah Policy press release — verified March 24, 2026
- Kalshi/Polymarket insider trading guardrails: AP via ABC News, CryptoTimes — verified March 24, 2026
- Polymarket CLO Neal Kumar quote: AP via Las Vegas Sun — verified March 24, 2026
- Kyle Langford enforcement case: CFTC KDA-2026-0002 (primary source — $246.36 disgorgement + $2,000 penalty = $2,246.36 total); CryptoTimes — verified March 24, 2026
- DraftKings/FanDuel stock spike: AP via Las Vegas Sun, The Guardian — verified March 24, 2026
- BETS OFF Act sponsors (Murphy/Casar, March 17, 2026): murphy.senate.gov — primary source; Reuters March 17, 2026
- Combined PM volume $18.3B (February 2026): ESPN, March 23, 2026 — verified March 24, 2026
- Coalition for Prediction Markets spokesperson quote: The Hill — verified March 24, 2026
- Kalshi valuation $22B: Bloomberg/Reuters, verified March 2026
- Kalshi regulation (CFTC DCM + DCO): CFTC.gov, verified March 2026
- Polymarket entity (QCX LLC d/b/a Polymarket US): verified March 2026