On March 23, 2026, U.S. Senators Adam Schiff (D-Calif.) and John Curtis (R-Utah) introduced the “Prediction Markets Are Gambling Act,” a landmark piece of bipartisan legislation designed to restrict federally regulated platforms from offering contracts on sporting events. The bill aims to amend the Commodity Exchange Act to explicitly prohibit the Commodity Futures Trading Commission (CFTC) from allowing “event contracts” involving athletic competitions or casino-style games like poker and blackjack. This legislative move follows a surge in popularity for platforms like Kalshi and Polymarket, which have recently expanded their offerings beyond political and economic outcomes into the multi-billion-dollar sports wagering market. Lawmakers argue that these products are “sports bets by another name” and represent a “backdoor” into online gambling that bypasses state-level consumer protections and tax frameworks. If passed, the bill would force a major restructuring of the 2026 prediction market landscape, mandating that all sports-related activity return to the oversight of state gaming commissions rather than federal derivatives regulators.
Protecting State Sovereignty and Closing the “Federal Backdoor” on Gambling
The primary motivation behind the Schiff-Curtis bill is the protection of state authority over gambling regulations, a power that many lawmakers believe is being eroded by the CFTC’s “permissive” stance on innovation. Senator Schiff emphasized that prediction markets currently operate in a legal gray area that allows them to offer wagers in all fifty states, often in direct violation of local laws that prohibit sports betting or restrict it to licensed brick-and-mortar operators. The “Prediction Markets Are Gambling Act” seeks to restore the traditional balance by ensuring that any contract that functions as a bet on a human athletic performance is treated with the same rigor as a traditional sportsbook. This effort is particularly focused on protecting younger users, with Senator John Curtis noting that “too many young people are being exposed to addictive gaming contracts” under the guise of financial trading. By removing the CFTC’s discretion to “greenlight” these markets, the bill intends to eliminate the perceived “regulatory arbitrage” that has allowed prediction platforms to grow into a 20 billion dollar industry while contributing no public revenue to the states in which they operate.
Industry Pushback and the Risk of Driving Crypto Markets Offshore
The introduction of the bill has met with immediate resistance from the prediction market industry and its advocates, who argue that a ban on sports contracts will merely drive activity toward unregulated offshore platforms. Elisabeth Diana, a spokesperson for Kalshi, stated that regulated U.S. exchanges offer a “fairer choice” for consumers by providing transparent, peer-to-peer markets without the “house edge” found in traditional casinos. Industry leaders contend that the legislation is motivated by a desire to protect the monopolies of established sportsbooks and brick-and-mortar casino interests rather than genuine concern for consumer safety. Furthermore, proponents of prediction markets argue that sports contracts provide valuable data and “crowd-sourced intelligence” that is often more accurate than traditional polling or expert analysis. As the 2026 legislative session continues, the debate will likely center on whether the federal government should play a role in “protecting” states from digital competition or if the “financialization of everything” has reached a point where traditional gambling laws are no longer applicable. For the 2026 participant, this bill represents the first major bipartisan effort to define the boundaries of the digital asset economy and its intersection with the trillion-dollar global sports industry.
