UK gambling stocks climb on US move against prediction markets

UK gambling stocks moved sharply higher after news that US lawmakers are planning to crack down on prediction market platforms offering sports betting-style contracts. The proposed legislation is seen as a potential win for traditional operators, which have faced growing competition from these lightly regulated alternatives.

US bill targets prediction market loophole

A bipartisan group of US senators is preparing legislation that would block prediction market platforms from offering contracts linked to sports and casino-style outcomes. The proposal specifically targets firms operating under the oversight of the Commodity Futures Trading Commission.

Platforms like Kalshi and Polymarket have gained traction. They’re offering event-based contracts that resemble sports betting. The difference is they don’t requiring state-level gambling licences.

This regulatory gap means they’ve scaled quickly. Kalshi, for example, has indicated that sports-related contracts make up around 90% of its trading volume.

"Serving the American people is a privilege, not a pathway to profit. Our commonsense, bipartisan bill will give Americans confidence that the decisions of their elected officials are guided by merit, not personal profit. I am proud to partner with Representative Budzinski to ensure that government officials do not profit from the sensitive information entrusted to them." Rep. Adrian Smith, a Republican from Nebraska leading the move.

Traditional operators benefit from policy shift

The proposed crackdown was welcomed by investors. Shares in Flutter Entertainment have risen significantly in early trading. The company owns FanDuel, which currently holds around 43% of the US sports betting market.

Rival Entain also saw strong gains. Its US joint venture, BetMGM, generated $2.8bn in revenue in 2025. The shows the scale of the opportunity at stake.

Prediction markets have been viewed as a growing threat to these operators. Because they avoid traditional licensing frameworks, they have been able to offer similar products with fewer compliance costs. Regulated firms are feeling the pressure.

Legal pressure already building across US states

Even before federal action, prediction market platforms have been facing increasing scrutiny at state level. Authorities in Arizona have filed a criminal case against Kalshi. Multiple states have issued cease-and-desist orders too.

This mounting legal pressure suggests regulators are becoming less willing to tolerate platforms operating in what many see as a grey area between financial trading and gambling.

For UK-listed firms with major exposure to the US market, the proposed legislation could help level the playing field. If passed, it would remove a key competitive advantage held by prediction market operators. The position of licensed betting companies would be stronger.

Conclusion

The market reaction shows how sensitive gambling stocks remain to regulatory developments in the US. The legislation is still at an early stage but investors appear to be betting that tighter rules on prediction markets could benefit established operators.

For firms like Flutter and Entain, the outcome of this bill could change competition.