House Bill Aims to Prohibit Prediction Markets Offering Sports Event Contracts
The legal cauldron brewing regarding prediction platforms offering sports event contracts just got hotter as a House bill to prohibit those companies from doing so was recently announced.
Whether it gains traction in the lower chamber is unclear, but it does increase the pressure against the federally licensed prediction markets from offering their version of sports betting throughout the 50 states.
Fair Markets and Sports Integrity Act
One of the most strident opponents of prediction markets offering sports event contracts resides in Nevada, where the economy is built around casino gambling and sports betting.
The congressional tip of the spear in leading that charge is Representative Dina Titus (D-NV), who recently announced the Fair Markets and Sports Integrity Act, which would amend the Commodity Exchange Act to prohibit Commodity Futures Trading Commission (CFTC)-licensed entities from offering those contracts throughout the nation.
Representative Titus’ bill has been referred to the House Agriculture Committee for consideration, but it is the latest effort to provide relief for mobile sportsbooks that pay state licensing fees and taxes on revenues from prediction market platforms encroaching on their audience.
“These prediction markets are rapidly expanding around the world without the same guardrails that apply to licensed, regulated gaming operators,” Titus said in a press release. “Consumers deserve transparency, accountability, and protections against predatory practices.”
Not the Same Rulebook
The prediction platforms are federally licensed under the CFTC, and industry leaders like Kalshi argue that federal authority supplants that of the state gaming commissions, allowing them unfettered access into all 50 states, offering whatever contracts they wish, including political and sports event contracts, the same as facilitating trading on commodities like gold and silver.
A similar bill in the upper chamber, introduced by Senator Richard Blumenthal (D-CT) at the beginning of February, is also being considered.
Senator Blumenthal posted the following on X:
“As Super Bowl Sunday looms—with $1.67 billion in bets expected—Americans need protection against online sports betting companies & prediction markets that exploit problem gamblers. My legislation is a start.”
CFTC Remains Neutral
Under the Trump administration, the CFTC has taken a hands-off approach to the legal battle raging between prediction markets and state gaming commissions that are adamantly opposed to them operating within their boundaries.
The states have skin in the game due to the tax money they generate off the profits of the sportsbooks operating within their jurisdictions.
Many of the sportsbooks are also vehemently opposed to the prediction platforms operating as pseudo bookmakers in offering these sports event contracts, as their activity is capturing a small percentage of their customers’ gambling dollars.
Michael Selig, the newly confirmed chairman of the CFTC, had publicly stated during his nomination hearings that his organization would maintain the same neutrality and allow the courts to decide the legality of the sports event contracts.
However, he has recently announced that the CFTC would be drafting new and amended rules to address cryptocurrency and blockchain technology. Whether that also includes a position specifically on sports event contracts remains to be seen.
Selig recently stated, “For too long, the CFTC’s existing framework has proven difficult to apply and has failed our market participants. That is something I intend to fix by establishing clear standards for event contracts that provide certainty to market participants.”
