A bipartisan group of senators led by Sen. Adam Schiff (D-CA) and Sen. John Curtis (R-UT) is reportedly looking to introduce legislation to bar platforms regulated by the Commodity Futures Trading Commission (CFTC) from offering contracts tied to sporting events, escalating the ongoing battle over oversight of prediction markets.

Schiff argued that the CFTC has effectively enabled the expansion of such markets, calling for congressional intervention to close what he described as a regulatory loophole.

He told the Wall Street Journal that these platforms bypass state-level consumer protections, encroach on tribal authority, and generate no public revenue.

Curtis echoed concerns from a consumer protection standpoint, particularly highlighting exposure among younger users. He said sports betting and casino-style contracts should remain under state jurisdiction rather than federal oversight.

Proposal Expands To Ban Casino-Style Contracts

The Wall Street Journal on Monday reported that the proposed legislation goes beyond sports-related contracts, aiming to prohibit so-called "casino-style games" on prediction-market platforms.

This includes offerings resembling slot machines, blackjack, video poker, and bingo.

The bill marks the first bipartisan effort in the Senate to directly regulate prediction markets, signaling growing scrutiny as the sector expands into areas traditionally dominated by regulated gambling operators.

Platforms such as Kalshi and Polymarket currently offer binary, yes-or-no contracts across a range of topics, including politics, weather, and entertainment.

However, sports-related trading has emerged as a dominant segment, placing these platforms in direct competition with established betting operators like FanDuel and DraftKings Inc (NASDAQ:DKNG).

Legal Battles Intensify Across States And Federal Agencies

The legislative push comes amid mounting legal disputes involving states, federal regulators, and prediction-market firms.

The CFTC has maintained that it holds exclusive jurisdiction over event-based derivatives.

In February, the agency reinforced this stance in a court filing, asserting that states lack authority over such platforms.

At the state level, enforcement actions have accelerated. Nevada recently secured a temporary restraining order blocking Kalshi from offering contracts tied to sports, elections, and entertainment. Meanwhile, Arizona filed criminal charges against Kalshi's parent entities, alleging unlicensed gambling operations.

Kalshi has pushed back, urging Arizona to withdraw the charges while also initiating legal action against multiple states, including Arizona, Iowa, and Utah, to prevent potential bans.

Separately, Polymarket has challenged Michigan's enforcement efforts through litigation, underscoring the broader jurisdictional conflict.

Sports Leagues Show Mixed Response To Prediction Markets

While legalized sports betting has gained broad acceptance across most U.S. states, prediction markets have drawn a more cautious response from professional leagues.

Some leagues have raised concerns about the potential for market manipulation and insider-driven activity. Still, Major League Baseball has moved forward with a licensing agreement with Polymarket, granting the platform access to official league data while collaborating on monitoring wagering activity.

DKNG Price Action: DraftKings shares were up 7.22% at $25.38 during premarket trading on Monday, according to Benzinga Pro data.

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