Senate bill to target sports betting ban on prediction markets: WSJ

US Senators Adam Schiff and John Curtis are expected to introduce a bipartisan bill on Monday that would bar sports betting and “casino-style” contracts from prediction markets regulated by the Commodity Futures Trading Commission (CFTC), according to a Monday Wall Street Journal report.

“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,” Senator Curtis, one of the bill’s co-sponsors, told the WSJ.

If introduced as reported, the measure would add to a widening Washington push against certain prediction market contracts. The report adds to the growing regulatory scrutiny over prediction markets, following renewed insider trading concerns sparked by the US-Israeli war with Iran.

On March 10, Schiff introduced the DEATH BETS Act, a bill seeking to prohibit CFTC-regulated prediction markets from listing contracts tied to war, terrorism, assassination and individual death.

Related: Prediction markets boom on Iran bets as Congress eyes ban

Sports markets drive trading volume

Sports betting is a leading source of trading activity on prediction market platforms. Sports-related contracts accounted for 47.7% of Polymarket’s weekly notional volume and 78.8% for Kalshi last week, according to Dune data.

Sports betting generated $1.2 billion in weekly notional trading volume for Polymarket and $2.6 billion for Kalshi.

Polymarket, Kalshi, weekly notional volume by category. Source: Dune

State and federal lines blur

The regulatory pressure has also intensified outside Congress. On March 12, the CFTC  issued a staff advisory classifying event contracts on prediction markets as a “financial asset class.”

The commodities regulator also submitted an Advanced Notice of Proposed Rulemaking, asking for public feedback on how the Commodity Exchange Act (CEA) would apply to prediction markets. Polymarket and Kalshi are regulated by the CFTC as Designated Contract Markets (DCM).

Related: Kalshi, Polymarket face trading halt in Nevada after court rulings

While CFTC Chair Michael Selig claimed the CFTC had “exclusive jurisdiction” over prediction markets, an Ohio judge tested that claim in a March 9 ruling, saying that Kalshi had failed to show the CEA “would necessarily preempt Ohio’s sports gambling laws,” or that these sports betting contracts would fall under the “exclusive jurisdiction” of the CFTC.

On Friday, a Nevada judge temporarily blocked Kalshi from offering sports, election and entertainment event contracts in the state for 14 days, finding regulators were reasonably likely to succeed in arguing the markets violated Nevada gambling law.

Cointelegraph approached the senators for comment and a copy of the draft bill.

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