Sports Prediction Markets Ban: What the 2025 Senate Bill Means
Senators John Curtis and Adam Schiff are preparing a bipartisan bill that would prohibit sports prediction market contracts, directly targeting platforms like Kalshi and Polymarket. The proposal arrives as Major League Baseball formalized an integrity partnership with Polymarket, and both platforms have already begun restricting who can trade sports-related contracts. If passed, the legislation would reshape a market that traditional sportsbooks have watched with growing alarm.
Bipartisan Senate Bill Would Prohibit Sports Event Prediction Contracts
Curtis and Schiff Lead a Rare Cross-Party Push
Senator John Curtis (R-Utah) and Senator Adam Schiff (D-CA) are co-sponsoring legislation that would explicitly ban the trading of sports event outcome contracts on regulated prediction markets. The bill represents one of the few areas of genuine bipartisan agreement in the current Congress, uniting a conservative from a state with limited sports betting infrastructure and a progressive California Democrat who has long focused on consumer protection issues.
The proposal targets platforms operating under the jurisdiction of the Commodity Futures Trading Commission (CFTC), which granted Kalshi the right to list political event contracts in 2023 after a lengthy legal battle. That CFTC authorization opened the door for prediction markets to expand aggressively into sports territory, a move that traditional licensed sportsbooks immediately flagged as regulatory arbitrage.
The core legal argument behind the bill is that sports outcome contracts function identically to sports bets, and should therefore face the same state-level licensing requirements that govern DraftKings, FanDuel, and every other regulated sportsbook operating in the United States. Supporters of the legislation argue that allowing CFTC-regulated platforms to offer sports contracts without state gambling licenses creates an uneven playing field and undermines consumer protections built up over years of sports betting legalization.
MLB Partnership With Polymarket Accelerated Congressional Attention
Major League Baseball’s recent announcement of an integrity partnership with Polymarket added urgency to the legislative effort. The partnership, framed around protecting the integrity of game outcomes, paradoxically drew attention to how deeply prediction markets had already embedded themselves in professional sports. Congressional staffers and sports betting lobbyists cited the MLB deal as a catalyst that moved the Curtis-Schiff proposal from a discussion draft to an active legislative priority.
The timing matters because Polymarket, which processed over $3.5 billion in trading volume during the 2024 U.S. presidential election cycle according to public platform data, has been aggressively expanding its contract categories beyond politics. Sports contracts represented a logical next vertical, and the MLB partnership signaled institutional acceptance that alarmed both regulators and traditional gambling operators simultaneously [1].
Flutter Gains 5% and DraftKings Rises 2.3% as Markets Price In the Ban
Traditional Sportsbooks Stand to Benefit Directly
Financial markets moved immediately on news of the proposed legislation. Flutter Entertainment, the Dublin-based parent company of FanDuel, saw its stock rise 5.0% on the session. DraftKings, the Boston-headquartered rival, gained 2.3%. Both moves reflect investor logic: if prediction markets cannot offer sports contracts, the betting volume those contracts would have captured flows back to licensed sportsbooks operating under state frameworks [2].
Flutter operates FanDuel, which held approximately 42% of the U.S. online sports betting handle as of the most recent quarterly filings, making it the single largest beneficiary if prediction market sports contracts disappear. DraftKings, with roughly 27% market share, stands as the second-largest winner. Neither company commented publicly on the legislation, but their stock performance communicated their investors’ verdict clearly.
The market reaction underscores a structural tension that has defined the prediction market debate since 2023: CFTC-regulated platforms operate nationally without state-by-state licensing fees, taxes, or compliance costs that licensed sportsbooks pay in every jurisdiction where they operate. States like New York impose a 51% gross gaming revenue tax on mobile sports betting, a burden prediction markets have so far avoided entirely.
State Tax Revenue Adds Political Weight to the Federal Push
State governments collected an estimated $3 billion in sports betting tax revenue in fiscal year 2024, according to the American Gaming Association’s annual report. That revenue stream depends on licensed operators paying state taxes, and prediction market sports contracts threaten to siphon handle away from taxable channels. Governors and state lottery directors have quietly lobbied their federal representatives to act, adding a fiscal federalism argument to the consumer protection case Curtis and Schiff are making publicly.
New Jersey, which generated approximately $170 million in sports betting tax revenue in 2024, and Pennsylvania, which collected over $130 million, represent states with the most direct financial exposure. Their congressional delegations have reason to support the Curtis-Schiff bill regardless of party affiliation, which may explain why the proposal is gaining traction faster than most gambling-adjacent legislation typically does in Washington.
How Kalshi and Polymarket Responded Before the Bill Was Filed
| Platform | Restriction Implemented | Scope |
|---|---|---|
| Kalshi | Banned political candidates from trading their own campaign contracts; blocked sports participants from trading related contracts | Targeted: specific conflict-of-interest categories |
| Polymarket | Broad ban prohibiting trades where users might possess confidential information or the ability to influence the event outcome | Wider: covers any insider-advantage scenario |
| FanDuel / DraftKings | Already prohibited under state licensing agreements and league integrity rules | Comprehensive: state-mandated compliance frameworks |
Both Kalshi and Polymarket moved to implement integrity guardrails before the Curtis-Schiff bill was formally introduced, a pattern that suggests both platforms anticipated regulatory scrutiny and attempted to pre-empt it. Kalshi’s approach was surgical: it banned political candidates from trading contracts tied to their own campaigns and prohibited athletes, coaches, referees, and team employees from trading contracts on events they participate in or influence [3].
Polymarket took a broader posture, instituting a platform-wide prohibition on trading by anyone who possesses material non-public information about an event or who has the practical ability to affect the outcome. That framing mirrors the insider trading language used in securities regulation, suggesting Polymarket’s legal team is positioning the platform as a financial instrument rather than a gambling product. The distinction matters enormously for which federal agency claims jurisdiction.
The CFTC versus state gambling regulator jurisdictional question is the central legal fault line in this entire debate. If prediction market sports contracts are commodities futures, the CFTC governs them and state gambling laws do not apply. If they are bets, every state with a sports betting regulatory framework can demand licensing compliance. The Curtis-Schiff bill would resolve that ambiguity by statute, removing the question from regulatory interpretation entirely.
The MLB integrity partnership with Polymarket fits into this context as a strategic move by the league to maintain relevance in the prediction market space while also building a paper trail of good-faith compliance efforts. MLB has existing integrity agreements with licensed sportsbooks that include data sharing, suspicious activity reporting, and trading restrictions for players and team personnel. Extending similar frameworks to Polymarket gave the league leverage in any future regulatory conversation.
What Prediction Market Regulation Means for Privacy-Focused Crypto Users
Prediction markets like Polymarket operate on blockchain infrastructure, with Polymarket built on the Polygon network and settling contracts in USDC. For the Monero community and privacy-focused crypto users broadly, the regulatory trajectory here carries a direct signal: federal lawmakers are increasingly willing to impose identity verification, trading restrictions, and outcome-based prohibitions on blockchain-native financial platforms when those platforms touch regulated industries like sports betting.
Polymarket already requires KYC verification for U.S. users and geo-blocks American IP addresses following earlier CFTC enforcement. The Curtis-Schiff bill, if passed, would add another layer of federal prohibition on top of existing restrictions, reinforcing the pattern that on-chain activity tied to real-world regulated events attracts the same regulatory treatment as its off-chain equivalents. Privacy advocates watching this case should note that the compliance mechanisms being discussed, including identity-linked trading bans and information-based restrictions, depend entirely on platforms knowing who their users are. That dependency is precisely what privacy-preserving infrastructure like Monero is designed to address in contexts where such surveillance is not legally mandated.
Key Takeaways
- Senators John Curtis (R-Utah) and Adam Schiff (D-CA) are co-sponsoring bipartisan legislation to ban sports event contracts on prediction markets.
- Flutter Entertainment (FanDuel’s parent) rose 5.0% and DraftKings gained 2.3% on news of the proposed ban, reflecting direct financial benefit to licensed sportsbooks.
- Kalshi implemented targeted bans on political candidates and sports participants trading related contracts before the bill was formally introduced.
- Polymarket instituted a broader prohibition covering any user with confidential information or outcome-influencing ability, mirroring securities insider trading language.
- Major League Baseball’s integrity partnership with Polymarket accelerated congressional attention to the sports prediction market issue in 2025.
- U.S. states collected an estimated $3 billion in sports betting tax revenue in fiscal year 2024, giving state governments a fiscal incentive to support the federal ban.
- The CFTC versus state gambling regulator jurisdictional question remains the central legal dispute the Curtis-Schiff bill would resolve by statute.
Frequently Asked Questions
What is the Curtis-Schiff prediction markets bill?
The Curtis-Schiff bill is a bipartisan Senate proposal from John Curtis (R-Utah) and Adam Schiff (D-CA) that would ban sports event outcome contracts on prediction market platforms like Kalshi and Polymarket. The bill has not yet passed as of 2025 and remains in the proposal stage, but it has already moved markets and prompted platform-level policy changes.
Why did Flutter and DraftKings stocks go up on prediction market ban news?
Flutter (FanDuel’s parent) rose 5.0% and DraftKings gained 2.3% because investors expect that banning sports contracts on prediction markets would redirect betting volume to licensed sportsbooks. Prediction markets currently operate without state-level licensing costs and taxes, giving them a structural cost advantage that the proposed ban would eliminate.
What did Kalshi ban regarding sports trading?
Kalshi banned political candidates from trading contracts tied to their own campaigns and blocked athletes, coaches, referees, and other sports participants from trading contracts on events they are involved in or can influence. The restrictions were implemented proactively before the Curtis-Schiff bill was formally introduced [3].
Is Polymarket legal in the United States?
Polymarket geo-blocks U.S. IP addresses and requires KYC verification following a 2022 CFTC enforcement action that resulted in a $1.4 million settlement. American users cannot legally access Polymarket directly. The Curtis-Schiff bill would add federal statutory prohibition on sports contracts to the existing regulatory restrictions already in place.
The Bottom Line
The Curtis-Schiff proposal is not a fringe effort. A Republican from Utah and a Democrat from California agreeing on financial regulation is rare, and the stock market’s immediate reaction confirms that professional investors view the bill as credible. Flutter gaining 5.0% and DraftKings rising 2.3% in a single session on legislative news reflects genuine confidence that the proposal has a path forward, not just a press release.
Prediction markets built their 2024 credibility on political event contracts, processing billions in volume during the U.S. presidential election. Sports contracts were the obvious next expansion, and the MLB partnership with Polymarket signaled that institutional relationships were forming. The Curtis-Schiff bill arrives precisely at the moment when that expansion was accelerating, which is why both Kalshi and Polymarket moved to self-regulate before the legislation was formally filed. Self-regulation in anticipation of a bill is an acknowledgment that the bill has teeth.
Whether the legislation passes in its current form or gets amended through committee, the direction of travel is clear: federal lawmakers intend to draw a hard line between CFTC-regulated prediction contracts and state-regulated sports betting, and prediction market platforms that bet on regulatory ambiguity lasting indefinitely are now running out of runway.
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Sources
- Gambling911 – Reporting on Polymarket’s trading volume and the bipartisan Senate prediction market ban proposal
- Gambling911 – Flutter and DraftKings stock price movements following prediction market ban news
- Covers.com – Kalshi and Polymarket integrity restrictions and MLB partnership with Polymarket details
