Bipartisan Congressmen to Introduce Bill Blocking Sports Betting on Prediction Markets
Washington, D.C. – A coalition of Democratic and Republican lawmakers announced plans to file legislation that would prohibit wagering on sports events through prediction‑market platforms such as Polymarket and Kalshi. The proposal, first reported by The Wall Street Journal and echoed by industry outlet The Block, seeks to close a regulatory gap that has allowed both decentralized and offshore markets to facilitate betting on athletic contests outside the traditional gambling framework.
What the bill targets
The draft measure would specifically ban any form of sports‑related wagering conducted on “prediction market” exchanges. While Kalshi operates as a U.S.-registered, regulated exchange, Polymarket runs on the Polygon blockchain, giving it a decentralized architecture that complicates existing enforcement mechanisms. Both platforms have seen a surge in activity as users place wagers on outcomes ranging from election results to the final scores of major sporting events.
Legislative backdrop
The initiative arrives amid heightened scrutiny of crypto‑based financial products and a broader push by regulators to curb unlicensed gambling. Earlier this year, the Federal Trade Commission and several state gambling commissions issued warning letters to prediction‑market operators, cautioning that sports betting falls squarely within the jurisdiction of the Professional and Amateur Sports Protection Act (PASPA) and related state statutes.
Lawmakers involved in drafting the bill have not yet disclosed the exact language, but the bipartisan nature of the effort suggests they anticipate bipartisan support for a clear demarcation between regulated sports betting and the nascent prediction‑market sector.
Industry reaction
Stakeholders in the decentralized finance (DeFi) space have expressed concern that the legislation could set a precedent for broader restrictions on blockchain‑based financial services. Kalshi’s management, which has emphasized its compliance with U.S. securities and commodities regulations, said it will monitor the bill’s progress and engage with policymakers. Representatives from Polymarket argued that the platform’s primary function is information aggregation rather than gambling, noting that users often trade on non‑sport outcomes such as macro‑economic indicators.
Potential impact
- Regulatory clarity – If enacted, the bill would give federal and state regulators a clearer mandate to police sports‑related bets on blockchain platforms, potentially leading to enforcement actions against non‑compliant services.
- Operational adjustments – Prediction‑market operators may need to redesign their product offerings, either by restricting sports‑related contracts or by implementing robust KYC/AML safeguards to satisfy regulators.
- DeFi precedent – The legislation could be viewed as the first major federal attempt to regulate a specific use case of decentralized technology, influencing future policy discussions around other crypto‑based applications.
Key takeaways
- Bipartisan effort: Lawmakers from both parties are co‑sponsoring a bill that would ban sports betting on prediction markets.
- Targets both regulated and unregulated platforms: The legislation covers U.S.-registered exchanges like Kalshi and decentralized services such as Polymarket.
- Regulatory alignment: The move aligns with ongoing federal and state efforts to enforce existing gambling laws on crypto‑enabled platforms.
- Industry implications: Prediction‑market operators may need to overhaul their product lines or face potential enforcement actions, while the broader DeFi community watches for how this precedent could affect other blockchain use cases.
As the bill moves through committee hearings, stakeholders will be watching closely to gauge whether the proposed restrictions will reshape the intersection of sports betting, prediction markets, and the rapidly evolving DeFi ecosystem.
This report was compiled from publicly available sources, including statements from The Wall Street Journal and The Block.
Source: https://thedefiant.io/news/regulation/lawmakers-bipartisan-bill-ban-prediction-market-sports-betting-senmay
