Key Takeaways
- Bipartisan legislation seeks to prohibit CFTC-supervised platforms such as Kalshi and Polymarket from providing sports wagering contracts
- Shares of DraftKings (DKNG) and Flutter Entertainment (FLUT) each climbed approximately 8% in premarket sessions Monday
- The proposed legislation would additionally prohibit casino-style offerings including slots, video poker, and blackjack on prediction market sites
- Senators Adam Schiff and John Curtis are jointly backing the measure — representing the first cross-party Senate initiative to oversee prediction markets
- Multiple states such as Nevada, Arizona, Massachusetts, and Michigan have independently pursued legal measures against Kalshi
Shares of DraftKings (DKNG) soared approximately 8% during premarket hours Monday following a Wall Street Journal report revealing that bipartisan senators plan to unveil legislation banning prediction market operators from providing sports betting products.
The development represented positive momentum for established sports wagering companies, which have faced ongoing competition from platforms such as Kalshi and Polymarket targeting the same customer base interested in sports gambling.
The forthcoming legislation would prohibit organizations overseen by the Commodity Futures Trading Commission (CFTC) from offering contracts based on athletic competitions. This would have immediate consequences for Kalshi and Polymarket’s domestic activities — both prominent players in the prediction market space.
The proposal extends beyond sports betting, seeking to eliminate casino-style entertainment from these platforms, including slot machines, video poker, blackjack, and bingo games.
Senator Adam Schiff (D., Calif.) criticized the CFTC for “greenlighting these markets and even promoting their growth,” stating 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.”
Joint 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 stated.
This represents the inaugural bipartisan Senate proposal 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 of FanDuel, similarly experienced an 8% premarket increase following the announcement, as the proposed legislation would eliminate a significant competitive challenge to its primary operations.
Ongoing State-Level Legal Actions
The congressional initiative arrives amid existing state-level enforcement efforts against Kalshi. Nevada obtained a temporary restraining order preventing Kalshi from offering contracts related to sports, elections, and entertainment events.
Arizona escalated matters by filing criminal allegations against Kalshi’s parent entities for purportedly running an unlawful gambling operation without proper licensing — though Kalshi has contested these claims and requested the state withdraw its case.
Both Massachusetts and Michigan have initiated lawsuits against Kalshi, contending its prediction market offerings constitute unlicensed sports gambling. Polymarket has countered with its own lawsuit against Michigan seeking to block enforcement of state gambling regulations against its platform.
On the federal front, the CFTC has consistently asserted it possesses sole authority over commodities derivatives, encompassing event-based contracts. In February, the commission submitted a filing to the Ninth Circuit defending this jurisdictional stance.
Sports League Positions on Prediction Markets
Most prominent American sports organizations have generally embraced regulated sports wagering. However, their stance on prediction markets remains more cautious — centered on concerns about competitive integrity and potential misuse of confidential information.
Despite these reservations, Major League Baseball recently entered into a licensing agreement with Polymarket, providing the platform access to official league data while establishing cooperative monitoring of baseball-related wagering activity.
As of Monday morning, DraftKings had not issued any official commentary regarding the proposed Senate legislation.
