Key Highlights
- Bipartisan Senate legislation seeks to prohibit CFTC-regulated platforms such as Kalshi and Polymarket from sports betting contract offerings
- Shares of DraftKings (DKNG) and Flutter Entertainment (FLUT) each climbed approximately 8% during premarket hours Monday
- The proposed legislation would additionally prohibit casino-style offerings including slots, video poker, and blackjack on prediction platforms
- Senators Adam Schiff and John Curtis are backing the measure — representing the Senate’s inaugural bipartisan push to regulate prediction market operations
- Multiple states such as Nevada, Arizona, Massachusetts, and Michigan have independently pursued legal challenges against Kalshi
Shares of DraftKings (DKNG) climbed approximately 8% during Monday’s premarket session following a Wall Street Journal report revealing that bipartisan senators plan to unveil legislation prohibiting prediction market platforms from sports betting contract offerings.
The development represents positive momentum for conventional sports betting companies, which have continuously faced competition from platforms including Kalshi and Polymarket for sports wagering market share.
The pending legislation would prohibit Commodity Futures Trading Commission (CFTC) regulated entities from listing sporting event-based contracts. This would directly affect Kalshi and Polymarket’s domestic operations — two prominent prediction market platforms.
The measure would further prohibit casino-style gaming from these platforms, encompassing slot machines, video poker, blackjack, and bingo.
According to Sen. Adam Schiff (D., Calif.), the CFTC is “greenlighting these markets and even promoting their growth,” and stated 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-sponsoring Senator John Curtis (R., Utah) emphasized the personal nature of the issue. “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 stated.
This legislation represents the Senate’s first bipartisan attempt at prediction market regulation — a significant development amid escalating tensions between state authorities, federal agencies, and platform operators.
Flutter Entertainment (FLUT), the parent company of FanDuel, similarly experienced an approximately 8% premarket gain following the announcement, as the proposed measure would eliminate a significant competitive challenge.
Ongoing State-Level Legal Actions
The congressional initiative arrives as multiple states have already initiated independent legal proceedings against Kalshi. Nevada obtained a temporary restraining order preventing Kalshi from offering contracts related to sports, elections, and entertainment events.
Arizona escalated matters by pursuing criminal charges against Kalshi’s parent entities for purportedly conducting an unlicensed illegal gambling operation — though Kalshi has contested these allegations and requested dismissal.
Both Massachusetts and Michigan have initiated lawsuits against Kalshi, contending that its prediction market operations constitute unauthorized sports betting activity. Polymarket has countered by suing Michigan to block state gambling law enforcement against its platform.
At the federal tier, the CFTC has consistently asserted exclusive authority over commodities derivatives, including event-based contracts. In February, the agency submitted a Ninth Circuit brief defending this jurisdictional stance.
Sports League Positions on Prediction Markets
Most prominent U.S. sports leagues have generally endorsed legalized sports betting. Regarding prediction markets specifically, league positions vary — with apprehensions surrounding competitive integrity and potential insider information exploitation.
Notably, Major League Baseball recently executed a licensing agreement with Polymarket, granting the platform access to official league data while establishing collaborative monitoring of baseball-related wagering activity.
As of Monday morning, DraftKings has not issued any public commentary regarding the proposed legislation.
